The executive director of the Importers and Exporters Association of Ghana is advocating a sharp reduction of interest rates from the current average of 25% to 11%. Samson Asaki Awingobit explained that this will put local firms and businesses in a position to benefit fully from trade with their counterparts under the African Continental Free Trade Area (AfCFTA) agreement.
The boss of the Importers and Exporters Association was speaking in an interview with Wilberforce Asare, host of On the Ground, Asaase Radio’s programme on politics in the community, on Thursday (27 August).
Won’t respond to pressure
“You know we are going to implement the African Continental Free Trade Area from January 2021,” Awingobit told Asare. “Ask yourself: Ghanaian industries today, what rate are they borrowing at? Twenty-five per cent and above.
“If AfCFTA is implemented, many African countries like South Africa will bring their goods to Ghana, Kenya will bring their goods to Ghana. And in those countries they are borrowing at a rate of between 10 and 20%.”
Awingobit insisted that until the country addresses interest rates and the price of utilities, Ghanaian business will probably not experience the growth the implementers of the free-trade policy are hoping for.
Ghana’s average interest rate, which ranges between 25% and 35%, is one of the highest on the continent.
Various attempts by industry to put pressure on successive governments to address the challenge have not been fruitful.
On 17 August, President Akufo-Addo commissioned and handed over the fully furnished African Continental Free Trade Agreement Secretariat in Accra to the AfCFTA secretary general, Wamkele Mene.
The Commission of the African Union will administer the trade agreement, which will create a single market for 55 countries with a total population of 1.2 billion and a combined gross domestic product of roughly US$2.5 trillion.
So far the agreement has been signed by 54 countries, of which 28 (including Ghana) have ratified the deal.