By Mildred Siabi-Mensah, GNA
Takoradi, Oct. 19, GNA – Mr. Richard Adjorlolo, a former banker and entrepreneur has called for a review of lending practices that impose higher borrowing costs on poorer individuals and businesses.
He argued that the system could deepen poverty and widen economic inequality.
Financial institutions often charged borrowers considered high-risk higher interest rates, making it more difficult for low-income earners and small businesses to access affordable credit and improve upon their economic circumstances.
Mr. Adjorlolo told the Ghana News Agency that the situation was tantamount to “Poverty Penalty,” explaining that although risk assessment was an established banking practice, its application could disadvantage people who needed financial support to improve upon their livelihoods.
He said wealthier borrowers often had greater bargaining power to negotiate favourable lending terms, while poorer customers had limited options and were more likely to accept the conditions offered by financial institutions.
Mr Adjorlolo said the situation created an imbalance in which those with fewer resources paid more for credit, while those with greater financial capacity enjoyed more favourable conditions.
He noted that the practice appeared inconsistent with the broader principle of progressive taxation, under which higher-income earners generally contributed a greater proportion of their income than lower-income earners.
According to him, the effect of higher borrowing costs extended beyond access to credit, potentially undermining the efforts of individuals and small businesses to expand their operations, create employment and improve their livelihoods.
The former Banker explained that businesses operating in the same market faced similar selling prices, but those borrowing at higher interest rates had to contend with greater financing costs, putting them at a competitive disadvantage.
Mr Adjorlolo said the situation could become more difficult during periods of economic uncertainty, when businesses with limited financial reserves were less able to absorb unexpected losses or market disruptions.
He warned that higher borrowing costs could increase the financial pressure on vulnerable borrowers and make it more difficult for them to meet their repayment obligations.
He also criticised what he described as a system in which financial institutions could benefit from the vulnerability of poorer customers rather than helping them overcome their economic challenges.
Mr Adjorlolo said poverty should not be treated as a reason to impose more difficult financial conditions on people, arguing that society and its institutions had a responsibility to create opportunities for economic advancement.
The former banker also linked his concerns about domestic lending practices to the broader debate about the cost of borrowing by African countries on international financial markets.
He recalled that former President Nana Addo Dankwa Akufo-Addo had called for the removal of the Africa risk premium during an address at Chatham House in London in February 2020.
President John Dramani Mahama has similarly called for reforms to the international financial architecture, arguing that developing countries faced disproportionately high borrowing costs.
In his address to the 81st United Nations General Assembly in September 2026, President Mahama said developing countries could borrow at interest rates up to eight times higher than those available to industrialised countries.
Mr Adjorlolo said the concerns raised by the two presidents highlighted the need to examine how risk perceptions influenced access to affordable financing for African countries and their citizens.
He, therefore called for a financial system that supported economic development rather than placing additional burdens on people and countries already facing financial difficulties.
He said reforming lending practices would require financial institutions, policymakers and other stakeholders to examine how risk assessment could be balanced with the need to promote inclusion and economic opportunity.
Mr Adjorlolo said addressing the issue was important to efforts to reduce poverty, narrow inequality and create a financial environment in which individuals and businesses could access the resources needed to grow.
He concluded that people experiencing financial difficulties needed support and fair opportunities to recover, rather than borrowing conditions that could further undermined their economic prospects.
GNA
Edited by Justina Hilda Paaga /Kenneth Odeng Adade
Reporter: Mildred Siabi-Mensah
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