The Minister of Finance, Dr Cassiel Ato Forson, has made a claim which every Ghanaian business owner will be watching closely to see if it translates into their reality.
Speaking during a meeting with the Managing Director of the International Finance Corporation (IFC), Makhtar Diop, in Accra last week, Dr Forson said the government's deliberate efforts to reduce the cost of capital were beginning to ease financing conditions for businesses.
"We have worked to reduce the cost of capital for Ghanaian businesses, and the cost of capital is coming down.
A typical example is treasury bill rates, which we have purposefully driven down," he said. It is a bold and important statement.
For years, the single biggest complaint of the private sector has not been about taxes alone, or even about power, but about the price of money.
When Treasury (T-bill) rates were hovering above 30 per cent, no serious manufacturing, agribusiness or small business could compete for credit.
Why would a bank lend to a farmer or a factory at high risk when it could lend to government risk-free at 30 per cent?
That regime crowded out the private sector, killed jobs and made our banks lazy — mere collectors of government paper.
This means the deliberate policy to drive down T-bill rates is the right medicine.
The evidence is there. From peaks of over 30 per cent last year, 91-day bill rates have fallen sharply in recent months.
That is a direct result of improved fiscal discipline, reduced government domestic borrowing, and the return of some macroeconomic stability.
But we must be frank: a fall in treasury bill rates alone is not yet a fall in the cost of capital for the ordinary business in Makola, Suame Magazine or Tamale.
Banks’ lending rates are still hovering around 28 to 33 per cent. For most businesses, that is still prohibitive.
The transmission mechanism from T-bills to bank lending rates remains weak and slow.
The finance minister knows this, and the next phase of this policy must be to force that transmission.
How? First, by sustaining fiscal discipline so that the government does not return to the domestic market with huge borrowing appetite.
Second, by working with the Bank of Ghana to address the structural factors that keep lending rates high — high non-performing loans, high operational costs of banks, and the lack of long-term funds.
Third, by deliberately supporting development finance institutions like the Development Bank Ghana to provide patient, low-cost, long-tenor funding to productive sectors.
Dr Forson is right to link this to the bigger ambition: restoring stability to transform the economy.
He said, "We have seen economic stability return and we have also seen our credit rating improve from a very difficult past.
Going forward, we want to use this stability to transform the economy."
That stability is real and hard-won. Inflation has dropped significantly from the crisis peak of 54 per cent to more sustainable levels.
The cedi has shown greater stability.
Ghana's credit rating, which was in junk territory after the debt default, is beginning to improve.
But stability for its own sake is meaningless if it does not lead to cheaper credit, business expansion and jobs.
That is why the Finance Minister's second ambition matters even more — the pursuit of an investment-grade credit rating by 2030.
For decades, Ghana has borrowed expensively because we were seen as risky.
We have spent too much of our revenue — at one point over 70 per cent — just servicing debt.
We borrow to pay old debt, not to build new factories or roads.
If we can attain investment-grade status by 2030, it means we can borrow at five per cent instead of 10 per cent, double the amount for half the cost, and free up resources for development.
It is the difference between a debt trap and debt as a tool for transformation.
In the end, the finance minister's promise will be judged not by T-bill curves on a BoG website, but by whether a young woman processing gari in the Eastern Region can get a loan at 15 per cent instead of 35 per cent, whether a factory in Tema can raise long-term money to expand, and whether our debt servicing bill finally allows us to invest in our people.
The cost of capital is coming down.
That is good.
Now, let it come down to where businesses can actually feel it.
