Ghana’s banking sector maintains lending rates around 24 percent despite significant improvements in inflation and overall macroeconomic stability, creating persistent challenges for businesses across the country. The professional services firm Deloitte raised this concern in its comprehensive analysis of the government’s 2026 budget statement.
The elevated borrowing costs stand in stark contrast to rates offered in neighboring West African countries, placing Ghanaian enterprises at a competitive disadvantage. This disparity affects businesses’ ability to access affordable capital for expansion, equipment purchases, and day to day operations.
According to Deloitte, the high lending rates are negatively impacting the overall cost of doing business in Ghana. The firm emphasized that structural issues, when properly addressed, could sustainably improve macroeconomic fundamentals and lead to lower risk premiums for lenders.
Ghana has made remarkable progress in stabilizing its economy following years of fiscal volatility. Inflation has declined steadily over the past 12 months, with current trends suggesting the rate could fall below the Bank of Ghana’s (BoG) medium term benchmark target of 8 percent. The Ghana cedi has strengthened considerably, and external reserves have recovered after a period of depletion.
However, these improvements have not translated into proportional reductions in commercial lending rates. Banks continue to price loans based on perceived risks that may no longer reflect current economic realities. The lag between macroeconomic stabilization and lending rate adjustments represents a significant obstacle to Ghana’s economic transformation agenda.
Deloitte recommended close coordination between monetary and fiscal policy design and implementation to address structural bottlenecks that will eventually reduce the cost of borrowing. The firm stressed that solving these systemic challenges would significantly lower lending risk and create conditions for sustainably reduced rates.
The monetary policy rate set by the BoG currently stands at 21.50 percent, down from higher levels maintained during periods of acute inflationary pressure. While the central bank has begun easing its stance in response to improving conditions, commercial banks have been slower to pass these reductions on to borrowers.
Several factors contribute to persistently high lending rates. Banks cite elevated non performing loan ratios, operational costs, and required regulatory capital buffers as justifications for their pricing. The legacy of Ghana’s 2022 debt restructuring, which saw domestic bondholders take significant haircuts, has also made financial institutions more cautious in their lending decisions.
Small and medium enterprises bear the brunt of expensive credit, with many finding it impossible to secure loans at rates that allow for profitable operations. Manufacturing firms face particular difficulties, as high borrowing costs compound challenges posed by elevated utility tariffs and imported input prices.
The government’s 2026 budget aims to accelerate economic transformation through initiatives like the 24 Hour Economy program and expanded infrastructure investment. However, Deloitte’s analysis suggests these ambitions may be constrained if businesses cannot access reasonably priced financing.
Finance Minister Dr. Cassiel Ato Forson presented the budget under the theme “Resetting for Growth, Jobs, and Economic Transformation.” The statement outlined measures to deepen fiscal consolidation, improve revenue mobilization, and create an enabling environment for private sector growth. Yet without addressing lending rate challenges, the private sector’s capacity to respond to these opportunities remains limited.
International financial institutions have praised Ghana’s macroeconomic management under its International Monetary Fund (IMF) supported program. The country achieved a primary surplus in 2025 and successfully narrowed its fiscal deficit to sustainable levels. These accomplishments have restored investor confidence and stabilized financial markets.
The disconnect between policy rates and lending rates is not unique to Ghana, but the magnitude of the gap raises questions about transmission mechanisms within the banking sector. Some analysts argue that concentrated market power among a few large banks enables pricing discipline that keeps rates elevated despite improving fundamentals.
Consumer loans command even higher interest rates than business lending, often exceeding 30 percent annually. These costs limit household consumption and reduce domestic demand for goods and services, constraining economic growth potential.
Deloitte’s analysis comes as the government prepares to implement several tax reforms designed to ease pressure on businesses. The budget scraps the COVID 19 Health Levy and reduces Value Added Tax (VAT) from 21 to 20 percent. While these measures provide relief, their impact could be magnified if accompanied by more favorable lending conditions.
The Bank of Ghana’s Monetary Policy Committee meets periodically to assess economic conditions and adjust interest rates accordingly. Market observers anticipate further rate cuts in coming months as inflation continues its downward trajectory. Whether commercial banks will respond by lowering lending rates remains uncertain.
Regional comparisons highlight Ghana’s disadvantage. Countries like Senegal and Côte d’Ivoire offer business lending at substantially lower rates, attracting investment that might otherwise flow to Ghana. This competitive gap undermines efforts to position the country as West Africa’s preferred investment destination.
Deloitte emphasized that resolving structural issues would create a virtuous cycle of lower risk perceptions, reduced lending rates, increased business investment, and stronger economic growth. The firm’s recommendations focus on improving policy coordination, strengthening fiscal institutions, and accelerating reforms that enhance the business environment.
The 2026 budget projects real Gross Domestic Product (GDP) growth of approximately 4.9 percent over the medium term, with non oil GDP expected to expand around 5 percent. Achieving these targets depends partly on mobilizing private sector resources through improved access to affordable credit.
Ghana’s banking sector remains profitable and well capitalized by regulatory standards. The BoG has strengthened supervision and introduced measures to promote financial stability. However, questions persist about whether banks could operate sustainably with lower margins that would allow reduced lending rates.
Some financial institutions have launched specialized lending programs targeting specific sectors like agriculture and manufacturing with more favorable terms. These initiatives, while welcome, remain limited in scope and have not significantly altered the overall lending landscape.
The government continues engagement with banking sector leaders to explore mechanisms for accelerating the pass through of policy rate reductions to commercial lending. These discussions occur against the backdrop of Ghana’s broader economic transformation agenda, which requires active private sector participation to succeed.
Source: newsghana.com.gh
