High Lending Rates Hindering Business Expansion – Analyst
By: Solomon Nartey Tetteh
Economic Analyst Emmanuel Boateng has cautioned that persistently high lending rates are stifling business growth and limiting private sector expansion, despite recent declines in interest rates.
Speaking on Business Breakfast on Zed 101.9FM, Mr. Boateng noted that although lending rates have eased compared to 2023 and 2024 levels, they remain too high to meaningfully support business growth.
“If you have a business today and you don’t even have enough money to survive, you won’t be thinking about expansion. When survival becomes the priority, expanding operations becomes extremely difficult,” he said.
According to him, many businesses are currently focused on staying afloat rather than scaling up, largely because the cost of borrowing remains burdensome. While acknowledging that rates have come down, he questioned whether the current levels can genuinely be considered affordable.
“Yes, compared to 2023 or 2024, someone may say this is good. But how good is it? Relative to what benchmark? If we keep benchmarking ourselves against our worst performance in the past two or three years, then we are setting the bar too low,” he stressed
Mr. Boateng stressed the need for policymakers to adopt more ambitious standards in evaluating interest rate trends, arguing that businesses require significantly lower borrowing costs to thrive.
He explained that business owners are often faced with a difficult choice: borrow at high interest rates to expand or use limited internal funds merely to survive. In many cases, he said, entrepreneurs opt for survival.
“Should I borrow and pay very high interest on the money, or should I use what little I have just to survive?” he said.
The analyst further highlighted that credit to the private sector remains constrained because banks continue to invest heavily in treasury bills instead of lending to businesses.
According to him, this limits the flow of funds into productive sectors of the economy.
Mr. Boateng called for deliberate measures to significantly reduce borrowing costs and redirect more credit to the private sector to stimulate growth and expansion.
