33% interest rate killing Ghanaian businesses

Internationally acclaimed Singaporean economist, Dr. Victor Koh has described as an economic suicide, the high-interest rates existing in Ghana’s financial sector.

In an exclusive interview with the Republic newspaper recently, the Dr. Koh, who has undertaken extensive consultancy services in over 100 countries worldwide, explained that although there is hope for the Ghanaian economy to become like Singapore’s, few unbearable factors such as the energy challenges and high-interest rates are a major bane to the country’s development effort.

“...for instance, you have a bank lending at 33% interest rate there is a killer on any economy; it will kill your development effort cause no one is there to touch them, it's almost like committing economic suicide because to borrow at 33% means you have to use the money and make more than 33%, otherwise you must go bankrupt…,” he noted.

“You have basic things like energy problem; in stock electricity capacity of 2800 megawatt and your running capacity will be 1500, and you have all kinds of problems because half of your energy comes from hydro and seasonal etc, you have to solve this problem. Energy is something for a country to develop; you must always produce more energy than the demand for it.”

Dr. Koh's views on economies across the world are well respected, having consulted for governments, businesses and educational institutions. In Africa, he has consulted for various institutions in Kenya, Burundi, Ethiopia, Democratic Republic of Congo, Cameroon, Chad, Central African Republic, South Sudan, Zambia, Zimbabwe, Malawi, South Africa, Benin, Nigeria and Ghana.

In his expert perspective, he acknowledged the current energy situation that the John Mahama administration have been forced to grapple with, saying Ghana had been overly reliant on Hydro-electric power for too long. For him, without a deeper energy mix, during crisis, energy becomes extremely expensive “…during crisis time, energy is most expensive and it will hurt the country, industry and businesses.”

“These are the entanglements that prevent development and transformation of the country,” he told this paper on the sidelines of the recent SADA Business forum in Tamale.

Dr. Kor was however optimistic that the Ghanaian economy will make a significant recovery, “Indications look good, your global competitiveness as a country and economy look good just because you have good infrastructure, educational, manpower, you have a good educational system, and even Nigeria is sending their children to your country...”

Dr. Koh was born and educated in Singapore, where he received his Bachelor of Science degree from the University of Singapore, he is recognized by Singapore as a member of the “Pioneer Generation” that helped to build today’s Singapore.

Singapore and Ghana share similar post-colonial history; the two countries had independence from Britain approximately in 1957. However, while Singapore had joined the league of developed nations, Ghana is still wallowing as a third world economy.