Place cap on interest rate - Spio tells BoG

The Bank of Ghana has been asked to place a cap on the interest rates micro finance companies give out to their customers.

According to the Trade and Industry Minister, Dr Ekow Spio-Garbrah, the move will help check the unrealistic interest rates being used to entice unsuspecting customers.

His comments follow recent financial scandals which have hit the micro finance sector. Dr. Spio-Garbrah told Starr Business the central bank is being engaged on the matter.

“We went to them before this crisis of 70 micro finance institutions being closed down to talk about the high cost of credit and therefore the high interest rate.

“I am only saying here that many of the micro finance institutions, even those that have not been banned, the ones that are still in operation today … claim they can offer high interest to savers because they also are allowed to charge high interest to borrowers and until you bring a cap on interest rate that micro finance institutions or any financial institutions can lend at any percentage they want,” the minister stated.

Dr. Spio-Garbrah believes this is a sure way to cure the high interest rate regime Ghana is faced with, a development he believes is stifling the growth of businesses.

The trade minister since assumption of office has embarked on a series of campaigns against the high interest rates. A forum was held last year to address the matter.

Dr. Spio-Garbrah maintained until stringent regulations are put in place the country’s interest rate will continue to escalate.

“…While we may say we are running a liberal economy, it doesn’t mean it is a lawless economy, it doesn’t mean it is an unregulated economy so it is a matter of how the regulator chooses to regulate the economy,” he said.