NIB MD laments cost of borrowing for private sector

The issue of private-sector lending continues to remain a problem as stakeholders in the banking sector have expressed worry about the high cost of borrowing for the actors in the private sector.

Managing Director of the National Investment Bank, Samuel Sarpong, in interaction with Citi Business News, attributed the crowding out of private-sector lending to the high demand for financing by government.

“We look at an economy where interest rates are high. The demand for financing by government is also crowding out some of the money that is available for the private sector nevertheless, the issue is that the best risk in the economy is government borrowing at high rates so obviously, other actors in the economy will have to pay more than what the government pays. The government normally borrows through the treasury bills and bonds and as a result, the current bond rates and treasury bill rates are high and is a challenge for private actors in the economy.”

Some analysts have blamed the Bank of Ghana and even the banks for the high lending and interest rates in the country.

Others, however, blame the government and its borrowing for it.

Some have even called for a re-evaluation of the pricing model for government short-term bills, saying the high rates they offer are among the reasons the cost of lending is so expensive.

Source: Citibusinessnews