The Bank of Ghana recent Annual Percentage Rate (APR) survey data indicates that banks and other financial institutions in the country charged as low as 14 percent (though unrealistic) and as high as 42 percent as interest for loans given to households from January to October this year.
This shows a huge difference between the policy rate (the rate the Central Bank lend to the commercial banks) and the highest rate at which citizens and businesses are being charged by commercial banks and other financial institutions. The policy rate is currently maintained at 16% for about four MPC reporting times.
The APR according to the Central bank, represents the annual rate charged by banks for lending to the public. This includes the interest rate charged by a bank, plus all other charges applicable against a credit such as insurance fee, processing fee, commitment fee, among others. The Annual Percentage Rate therefore reflects the true cost that the public borrows from banks.
From the survey covering January to October 2019, the United Bank for Africa (UBA) had, the lowest rate for Vehicle loans for households. UBA’s rate started at 18.7 percent but rose to 31.7 percent.
First Atlantic Bank came in second according to the data from the central bank for vehicle loans, starting at 21 percent, but rising to a high of 32 percent. The highest rate for Vehicle loans to households over the period was charged by FBN Bank at 33.1 percent.
For mortgages for households, United Bank for Africa again had the lowest starting rate at 18.7 percent, but rose to a high of 31.7 percent in some lending cases. Meanwhile, Prudential Bank recorded the highest rate charged on mortgages for households starting at 30.4 percent and rising to 32.3 percent in some cases.
For enterprises, Standard Chartered Bank charged both the lowest and highest rates on credit to the Agriculture sector between January and October 2019, starting at 14 percent on some loans and rising to 42 percent on other loans.
On the manufacturing front Standard Chartered Bank once again charged both the lowest and highest rates on credit to the sector during the period under review, starting at 14 percent on some loans and rising to 42 percent on other loans.
Access Bank meanwhile had the second lowest rate on the list provided by the Bank of Ghana, charging enterprises in the manufacturing sector a rate of 17 percent on some loan facilities. This figure rises all the way to 26 percent on other loan facilities in the same sector by the same bank.
A bank like the National investment bank had a starting rate of 29.5 percent on some loans in the manufacturing sector, and this rises to 34.3 percent on other loan facilities in the same sector.