Banks will continue to help businesses recover from COVID-19 – Republic Bank MD
Farid Antar - Managing Director of the Republic Bank
Managing Director of the Republic Bank, Farid Antar, has reassured the businesses, including small-scale enterprises that banks in the country will continue to offer financial assistance due to the impacts of COVID-19 for them to recover faster.
Companies or individuals in the business of imports and exports have ceased operations due to the closure of borders and restrictions on the movement of people.
Hotels and other businesses in the hospitality and tourism industries have also suffered significant losses, over a GH¢70million, due to stay-at-home orders and social distancing measures.
It is against this background that Mr Antar is reiterating banks’ willingness to support businesses that are hit by this pandemic with affordable loans, as their success also comes with great benefit to banks.
“Banks are part of the community, and when the businesses recover the banks benefit too. If the economy is not doing well we will all have a price to pay, so it is our obligation to do what we can to help businesses recover faster,” he said in an interview.
He further stated that banks have already shown a commitment to assisting businesses financially, by arranging with the Bank of Ghana and the Ministry of Finance to set up a GH¢3 billion in loans to be given to pharmaceutical companies and other manufacturers to enable them to focus attention on boosting their capacities to produce critical medical equipment.
According to the Republic Bank Managing Director, the GH¢3billion facility has multiple purposes of encouraging local production and moving the economy from import dependency to becoming more self-sufficient.
“The focus behind that fund is multiple. One is to encourage local production of emergency supplies by the pharmaceutical industry and other manufacturers. And the other purpose is to get the economy going and become much more self-sufficient.”
“Now there is opportunity to relieve some of the dependency on imports, especially on goods we can make locally. There are other industries like hospitality, entertainment and others which we will also help to recover faster,” he said.
Suggestions made by businesses
Also, businesses have made a case for borrowing to be cheaper, as the current 23 per cent and above interest on loans are too high, considering the recent environment where activities in the economy have slowed with consumption level reduced.
For businesses, high-interest rates will only make it more difficult for them to pay back loans hence, the call for banks to lower the cost of borrowing.
Bank of Ghana’s intervention
The Bank of Ghana has responded to this by cutting the policy rate by 150 basis points aimed at making more funds available to banks for operations.
The bankers’ association has also agreed to a general 200 basis points interest rate cut on all existing local currency-denominated loans and for all new loans to be sanctioned by member banks.
Also, Mr Antar said individual banks will continue ensuring that the cost of loans is reduced for businesses.
“Not only will funds be available but how they become available; the pricing will be lower than the normal pricing and the terms will be more favourable. Each bank will make their own risk assessment, but there are guidelines on the structure and we will provide data to the Bank of Ghana so that it will know we are fulfilling this pledge,” he said.