By Alex Ababio
At the 2026 Kwahu Business Forum, the Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, delivered a message many businesses have long waited to hear: Ghana is entering a phase where high borrowing costs must give way to a more sustainable, growth-oriented credit environment.
“We are focused on engineering a low interest rate regime,” he declared during an engagement with businesses and banks on the sidelines of the forum.
The statement comes at a critical moment for Ghana’s economy—emerging from years of macroeconomic instability marked by soaring inflation, currency depreciation, and prohibitively high lending rates that choked private-sector growth.
A History of High Borrowing Costs
For much of the past decade, businesses in Ghana have struggled under high lending rates. At their peak, borrowing costs exceeded 30 percent, creating what many economists described as a “credit trap” for enterprises.
Dr. Asiama acknowledged this reality bluntly:
“That level of borrowing is not good, and there is no way these businesses can repay.”
His remarks reflect a broader consensus among financial experts. Data from the International Monetary Fund and the World Bank consistently show that high interest rates in developing economies constrain investment, reduce job creation, and weaken industrial competitiveness.
In Ghana’s case, the impact was severe. According to the Bank of Ghana’s own Monetary Policy Reports (2023–2025), elevated policy rates—introduced to combat inflation—translated into commercial lending rates that made access to credit nearly impossible for small and medium enterprises (SMEs).
The Link to Rising Non-Performing Loans
One of the most significant consequences of high borrowing costs has been the rise in non-performing loans (NPLs) across the banking sector.
Dr. Asiama drew a direct connection:
“It is therefore not surprising that we have seen these high non-performing loans from these high interest rates in the past.”
This observation aligns with findings from the Bank of Ghana’s Financial Stability Reviews, which show that NPL ratios surged during periods of tight monetary policy and high lending rates. When businesses borrow at unsustainable rates, default becomes almost inevitable.
Financial analyst Joe Jackson, CEO of Dalex Finance, has previously noted in media interviews with Citi Business News that “high interest rates are both a symptom and a cause of financial sector stress,” explaining that they reflect underlying macroeconomic risks while simultaneously worsening borrowers’ ability to repay.
Signs of Decline in Lending Rates
Recent data suggests that Ghana may be turning a corner.
Commercial bank lending rates, which hovered above 22 percent in 2024, have reportedly dropped to around 12 percent in early 2026. Similarly, the Ghana Reference Rate—a benchmark used by banks to price loans—declined from 11.7 percent in March 2026 to 10 percent in April.
These figures are consistent with the broader disinflation trend reported by the Ghana Statistical Service, which has documented a gradual decline in inflation following aggressive monetary tightening and fiscal consolidation under Ghana’s IMF-supported programme.
Economists caution, however, that while nominal rates are falling, real interest rates—adjusted for inflation—remain a key factor in determining true borrowing costs.
Private Sector Still Starved of Credit
Despite the decline in rates, access to credit remains limited.
Dr. Asiama highlighted a troubling statistic:
“If you look at total banking sector lending to the private sector in relation to our GDP, compared to our peers in Africa, Ghana has the lowest, and that is not good.”
This concern is echoed in World Bank country reports, which indicate that domestic credit to the private sector in Ghana has consistently lagged behind regional averages. In countries like Kenya and South Africa, stronger financial intermediation has enabled higher levels of business financing relative to GDP.
Professor Godfred Bokpin, an economist at the University of Ghana, has repeatedly argued in public lectures and media interviews that Ghana’s financial system is “overly risk-averse,” with banks preferring to invest in government securities rather than lend to businesses.
This phenomenon—often referred to as “crowding out”—intensified during Ghana’s fiscal crisis, when high-yield government instruments became more attractive than private-sector lending.
Strengthening Banks: A Central Priority
To address these structural challenges, the Bank of Ghana is placing renewed emphasis on banking sector resilience.
“That is why we are focused on helping banks become stronger and more efficient to improve lending to the private sector,” Dr. Asiama said.
This strategy builds on earlier reforms, including the banking sector cleanup between 2017 and 2019, which saw the consolidation of several financial institutions and the introduction of stricter capital requirements.
According to official BoG reports, these reforms significantly improved the sector’s capital adequacy ratios and liquidity positions. However, analysts note that risk appetite has remained subdued, partly due to lingering concerns about asset quality and macroeconomic volatility.
The IMF, in its 2024 and 2025 programme reviews for Ghana, emphasized the need to “restore financial intermediation” by addressing both supply-side constraints in banks and demand-side weaknesses in the economy.
Exchange Rate Stability as a Key Pillar
Beyond interest rates, Dr. Asiama stressed the importance of exchange rate stability in supporting business growth.
A stable currency reduces uncertainty for importers, exporters, and investors—particularly in an economy like Ghana’s, where many industries depend on imported inputs.
The Ghana cedi experienced sharp depreciation between 2022 and 2023, but recent IMF-backed reforms and improved foreign exchange inflows have contributed to relative stability.
Economist Theo Acheampong, in policy commentary cited by international media outlets such as Bloomberg and the BBC, has argued that “exchange rate stability is as important as interest rate reduction in restoring investor confidence.”
The Governor’s Ambition: Single-Digit Lending Rates
Perhaps the most striking moment of Dr. Asiama’s remarks was his personal aspiration for lending rates:
“That is my prayer every morning, that rates should drop 10 per cent below.”
While the statement carries a tone of optimism, achieving single-digit lending rates will depend on several factors, including sustained low inflation, fiscal discipline, and continued currency stability.
Historically, Ghana has struggled to maintain low interest rates due to structural issues such as high public debt, fiscal deficits, and external vulnerabilities.
The IMF has repeatedly warned that premature easing of monetary policy could reverse gains in inflation control, underscoring the delicate balance policymakers must maintain.
Sustaining Economic Stability
Dr. Asiama concluded by emphasizing the need to consolidate recent gains:
“Stability is good, but the next step now is to strengthen the market and the health of the commercial banks in the country.”
This reflects a broader shift in Ghana’s economic strategy—from crisis management to recovery and growth.
Public documents, including Ghana’s IMF programme framework and Ministry of Finance reports, outline a roadmap focused on fiscal consolidation, structural reforms, and private-sector-led growth.
The Road Ahead: Opportunities and Risks
While the Bank of Ghana’s commitment to lower interest rates is widely welcomed, experts caution that the path forward is complex.
Lower rates could stimulate investment, boost job creation, and enhance economic competitiveness. However, if not carefully managed, they could also reignite inflationary pressures or weaken the currency.
For businesses, the key question is whether the current trend represents a temporary adjustment or the beginning of a sustained transformation in Ghana’s financial landscape.
For policymakers, the challenge lies in aligning monetary policy, fiscal discipline, and financial sector reforms to create a stable and predictable environment for investment.
Conclusion
The Bank of Ghana’s push for a low interest rate regime marks a significant turning point in the country’s economic trajectory.
Dr. Johnson Pandit Asiama’s remarks at the Kwahu Business Forum signal both intent and urgency: to move away from an era of prohibitively expensive credit toward one where businesses can access financing at sustainable rates.
Yet, as historical experience and expert analysis suggest, achieving this goal will require more than policy declarations. It will depend on disciplined implementation, institutional resilience, and the ability to navigate both domestic and global economic uncertainties.
For now, Ghana’s business community watches closely—hopeful that the promise of cheaper credit will translate into real opportunities for growth.