The steady interest rate decline in recent months, with a corresponding reduction in lending rates, augurs well for government's quest to deepen financial inclusion in the country, CEO of Opportunity International, Kwame Owusu-Boateng, has said.
Currently, we see banks "interest and lending rates coming down, which are good indications because businesses and individuals can borrow at a cheaper cost and be able to repay loans on time," he told the B&FT on the sidelines of the annual general assembly meeting of Oikocredit, a cooperative investment firm.
According to the central bank's latest monthly Annual Percentage Rates (APR) and Average Interest (AI) report, the average interest banks charge on loans and advances has seen a three-time consecutive drop.
The industry average for loans and advances, as at the end of March, dropped to 26.7 percent from February's rate of 26.9 percent, which in itself was a drop of 0.9 percent from month- end January 2017.
To Mr. Owusu-Boateng, this positive trend will enable small and medium sized enterprises ”which form the bulk of businesses in the informal sector” to borrow at a lower rate, produce more goods and services and be able to repay their loans.
"If the rates are good, then we will be able to reach out to more people with same resources; there will be high repayment rates for the banks to get more liquidity. The reverse is harmful as non-payment of loans results in high non-performing loans (NPLs)," he added.
Present at the event was Dr. William Derban, Director of Strategic Partnerships and CSR at Fidelity Bank, who reiterated the need for the deepening of financial inclusion in the country.
"Enhancing financial inclusion will also require more of digitisation or interoperability as the mobile space is growing, as can be seen with the number of people on mobile money," he said.
"We also need a reliable addressing system and national identification that will make it easier to track people who take loans from the bank. If these are worked on and successfully implemented, it will greatly move the financial inclusion dial in our favour," he added.
About 150 Oikocredit representatives and external guests from across Africa, Asia, Europe and the Americas attended the meeting at the Labadi Beach Hotel. They discussed strategy and operations of the organisation, and discussed opportunities and developments in Ghana.
Oikocredit's Regional Manager for West Africa, Yves S. Komaclo, said: "Oikocredit is an international financial cooperative; we have an ethical purpose, so our investments should have a financial return, but specifically social impact."
Mr. Komaclo added his voice to the importance of financial sector digitisation, saying: "Using digitisation to promote financial inclusion is the new trend; it will increase access to financial services by double, especially in difficult to reach areas.
This year, we are looking at 10m euros in approvals to support our target beneficiaries in the financial, agricultural and renewable energy sectors. We want to keep our presence in the country as there are huge prospects for investment."
Oikocredit has over 40 years experience in development finance, funding partner organisations active in inclusive finance (including microfinance), agriculture and renewable energy.
Through its loans and investments in 70 countries, Oikocredit aims to support partner organisations in helping low-income people to sustainably improve their living standards. It finances 15 partners in Ghana and a total of 70 in West Africa.
Source: Patrick PAINTSIL/thebftonline.com/Ghana