Businessman Seidu Agongo has revealed that his motivation for setting up Heritage Bank was to engender competitive interest rates from 35 per cent to 20 per cent.

In a recent interview with Metro TV, Mr Agongo said he went into banking to solve the interest rate problem.

“I don’t believe in the interest rates that the banks charge in Ghana. It’s too much. How can you go into a financial institution, wanting to take a loan and they’ll charge you 35 per cent per annum? Some will even charge you five per cent per month,” he complained.

He said: “No matter the reasons, to me it doesn’t make business sense because business is about continuity so once the banks take so much from them, they become dependent on the banks and that doesn’t allow them to plough back into their businesses to grow because it is only when the business grows that the bank owner also grows, so once you take more from me, it limits my ability to grow and then how does the bank grow?”

“So, I entered banking to ensure I would have the lowest interest rate for Ghanaians and businesspeople who wanted to borrow money,” Mr Agongo stressed.

He said: “Can you imagine if all banks were charging 35 per cent and I charge 20 per cent? They will not agree to die, they will come down.”

Mr Agongo proposed: “Let’s try and empower one indigenous person to set up a bank that gives interest rates at 20 per cent, it will control the whole banking sector and I’m definitely hoping to do that because can you tell me why you go and take a bank loan and you pay 35 per cent interest? Can you tell me why you go and take a loan and you’ll have to do some medical test before they give you the loan. Meanwhile, elsewhere, they don’t even ask you anything. And I can tell you that whatever they are requesting before a loan, sometimes it only apply to Ghanaians. It doesn’t apply to foreign companies. They give them an open cheque. Whatever amount they want, they give them.”

In his considered view, the banks are able to maintain the status quo because Ghanaians have no alternative since “our stock market has failed us.”

“If you look at the sub-region, apart from South Africa which has a very credible stock market, in the whole sub-region, there’s none. Go to the US, Japan, and Singapore, their stock market is a strong. Elon Musk is the richest man in the world today because even though his total share in his company is not up to 15 per cent, he has placed value on himself in the stock market. But the stock market in African is virtually collapsed. You can’t list there and when you even do, nothing happens, so you are forced to always depend on the bank and the bank is charging you 35 per cent in interest rate, and even with that you have to do HIV test to be sure you are not dying soon. What sort of life is this?” an exasperated Agongo wondered.

He said: “So, Heritage Bank was coming to fill these gaps so that within a matter of 10 years, we’ll become a stubborn monster of a bank within the sub-region. That was the idea because there is a need.”

Mr Agongo also advised banks to mentor and support young businesspeople to start up and gain experience.

“They could have a desk of experienced businesspeople who can mentor, guide, invest in and shape up young business upstarts, even if they won't give you the loan you applied for.”

Heritage Bank was among nine local banks that were collapsed by the Bank of Ghana under the Akufo-Addo administration.