On Tuesday, the Trade and Industry Ministry in conjunction with the Institute of Economic Affairs (IEA) organized a stakeholder forum on the high cost of credit and its implications for Ghana.
here was a general admission that the country’s high interest rate was a result of poor management of the country’s macro-economic fundamentals which they charged the government and the managers of the economy to address.
But Fifi Kwettey who once served as a former Deputy Finance Minister disagreed with their submissions.
Speaking on Accra-based Citi FM Wednesday, Mr. Kwettey blamed the citizenry and the financial institutions as the cause of the problem.
He argued that blaming an unstable economy is unacceptable because even when governments work to stabilize the economy, interest rates remain high “so it’s not at all an issue about current instability – no!”
According to him, financial institutions keep giving excuses ranging from high policy rate, treasury bill rate, high non-performing loans as being the cause for the high interest rate “so it tells you that there is something within our pricing that constantly ants to go for the kill.”
He described this as a “dysfunctional behavior… that throws the whole economy out of gear.”
The Ketu South Member of Parliament said the situation where Ghanaians continuously blame the government for the many problems the country face is a means of “seeking justifications in order to excuse our cultural decadence…”
He remarked that until “we look into the mirror and see the reflection of ourselves and accept that this is us in order to start to collectively make a move forward, we will continue turning around in circles.”
Talking will solve the problem
The Minister was convinced that in order to tackle the problem, there should be a national conversation.
“What we can do is to talk about it…We don’t build a nation without consciousness. All over the world, nations are built when citizens awaken to their responsibilities. Obviously, this awakening can start with a conversation that is not supposed to stop at the level of government.”
“These are things that people need to start taking responsibility for. There are things that government definitely wants to do but there are things that individuals need to take responsibility for. That responsibility must be assumed on both sides.”
Ghana cannot win with high interest rates
In a related development, an economist, Emmanuel Essilfie pointed out that interest rates have an effect on the general pricing level in a country but Ghana however “the interest rate setting mechanism in the banking and financial sector is perverse.”
“I have become tired of talking about it because for years, the excuse which will come out sometimes is that we don’t have street naming and addresses so it will be difficult to target, to track down debtors and so on. We have it now so why haven’t we had some significant drop in the price level?”
He warned that Ghana cannot with win “when we look at our level of interest and relate it as we should to other economic fundamentals.”