Bank loans: 35% interest rate senseless – Agongo says Heritage Bank would’ve charged 20% to force low rates

Businessman Seidu Agongo shared his motivation for starting Heritage Bank. He aimed to reduce interest rates from 35 percent to 20 percent. In a recent interview with Metro TV, he discussed the high cost of loans in Ghana.

Agongo expressed his frustration with current bank interest rates. He said, “How can you take a loan and pay 35 percent per annum?” Some banks even charge five percent monthly, which he finds excessive.

He believes high interest rates hurt businesses. When banks take too much money, businesses struggle to grow. This dependency limits their ability to reinvest and expand.

Agongo wants to offer lower interest rates for Ghanaians and businesspeople. He stated, “If I charge 20 percent while others charge 35 percent, they will have to lower their rates.”

He proposed empowering local individuals to create banks with better terms. He questioned why Ghanaians face strict loan requirements while foreign companies receive favorable treatment.

According to Agongo, the banking system remains unchanged because Ghanaians lack alternatives. He noted that the stock market in Africa has largely failed compared to markets in the US and Japan.

He criticized the need for unnecessary tests before loan approval, saying it complicates life for borrowers. Agongo believes Heritage Bank can address these issues within ten years.

He also suggested that banks should mentor young entrepreneurs. They could provide guidance and support even if they cannot approve loans.

Heritage Bank was one of nine local banks collapsed by the Bank of Ghana under President Akufo-Addo's administration.