An Investment Analyst, Kwame Ofori Asomaning, says among other factors, the high interest rate regime is partly to blame for the high unemployment in the country.
Interest rates are on the average currently between 25 and 30 percent.
According to Mr. Asomaning, the situation has made it extremely difficult for those in the private sector to borrow for expansion, which means they cannot employ more people.
He says those who wish to start-up new investments are also unable to do so due to the high interest rates thereby stifling the creation of new jobs.
[contextly_sidebar id=”MZXL1suTbz8g2UTI2So23tK29YqZUoBc”]There are predictions there might be a further surge in interest rates as the Bank of Ghana recently increased its monetary policy rate to 25 percent.
Mr. Asomaning in an interview on the Citi Breakfast Show, said there is the need for a reduction in interest rates to stimulate economic growth.
According to him, most Ghanaians have been compelled to invest in treasury bills rather than creating more jobs for the unemployed because of high interest rates.
“Currently, interest rates must come down to stimulate the economy because the interest rates are too high so people feel comfortable to put their monies into treasury bills. With rates as high as 27%, there is no interest to set up jobs; why do you have to take the pain to set up companies and you have people bothering you back and forth with pay rise and all that, you have a number of employee issues to deal with; and on top of it, you have to pay taxes. With all the ‘dumsor’ factors who would like to set up a company? It will collapse” he stated.
IMF deal won’t help
He also touched on the $940 million three-year IMF deal Ghana had signed onto, saying it will not make the country prosperous.
Mr. Asomaning argued that the IMF deal like any other foreign denominated loan, only reduces financial sovereignty.
“IMF has only one pill for all kinds of diseases in the world. If we have to take each of them, you will realize that this is not what we need. In fact, whether it is IMF loan or foreign loan, or foreign denominated loans are not good for our country; and this is because when you take a foreign loan, you reduce your financial sovereignty. Someone has to tell you what to do and you are restricted.”
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By: Marian Ansah/citifmonline.com/Ghana
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