Loan sharks in Ghana are making a killing in this current economic climate. Whereas in the advanced countries, including Britain lending rates are extremely low in Ghana the opposite exists.
What is really going on? The Ghanaian economy, admittedly like that of other African countries behaves as if it has no connection with the global economy. With the lower lending rates in the world today, our banks should have done a lot more to spur spending.
But according to sources within the banking industry, most of the banks have rather cut down on lending.
“Some microfinance institutions have run out of cash and are not lending anymore. I think that some of them will not be able to survive this year”, a source told Graphic Business.
“I believe that even with the 'criminal' rates that some of the loan companies charge, people are still borrowing. Therefore, we cannot really stop the companies from charging those rates. My fear is that if you try to stop them [the loan sharks], there will be a serious credit squeeze and since our banks and the government cannot do it all by themselves, it would be a serious problem for the economy”, the source said.
This means that the government has to do a lot more to shore up the local economy. The government must consider setting up a fund that would help people from the low income group to have access to cheap credit.
The government must consider setting up a fund that would help people from the low income group to have access to cheap credit.
Some of these funds already exist, but sadly, they have not been properly managed, and therefore their disbursement has not been above aboard. In fact, those who have tried to access credit through funds set up by the previous regime complain of excessive paperwork and bureaucracy. Some even say you may have to be a party member before you are considered! This is why the current regime must work hard to address the situation to ensure that there is cheap credit available at all times to the low income group.