Some commercial banks have begun reducing their lending rates following the decline in the Ghana Reference Rate (GRR), a move aimed at easing borrowing costs for businesses and improving access to credit.
The banks reduced lending rates from an average of about 22 per cent to around 17 per cent following the steady decline in the GRR from 14.58 per cent in February to 11.71 per cent in March 2026.
Businesses had been pushing for such adjustments for months, arguing that falling benchmark rates should translate into cheaper loans for companies that rely on bank financing to run and expand their operations.
The development is expected to lower the cost of doing business and support companies that rely on credit to manage working capital, import goods and invest in expansion.
However, business groups say the reductions remain insufficient, insisting that lending rates across the banking sector are still too high relative to the country’s improving economic conditions.
They say the ongoing macroeconomic recovery, characterised by declining inflation and improving investor confidence, should encourage banks to cut rates further.
The President of the Ghana Union of Traders Association (GUTA), Clement Boateng, said the decline in the reference rate was encouraging, but the lending rates offered by commercial banks remained burdensome for businesses.
He explained that banks usually added margins of about seven to eight percentage points to the reference rate when pricing loans, which pushed borrowing costs to levels that many traders struggled to manage.
“Even though the reference rate declined and that was positive for businesses, the lending rates offered by banks remained high and continued to place pressure on traders and small businesses,” he said.
Mr Boateng said many traders depended on bank loans to finance imports and maintain stock levels, making the cost of credit a critical factor in their operations.
He added that further reductions in lending rates would help businesses stabilise prices and expand.
He therefore urged regulators and banks to work towards achieving single-digit lending rates in the country.
Comparisons within the region
Mr Boateng said Ghana’s lending rates remained high compared with several countries within the West Africa sub-region.
He said some countries offered credit to businesses at rates between six and eight per cent, making it easier for companies to expand and compete in regional markets.
“In some countries within the sub-region, businesses accessed credit at between six and eight per cent, so we believe Ghana could also work towards similar levels to support business growth,” he said.
Mr Boateng said the business community intended to continue engaging regulators to ensure that monetary policy decisions translated into lower borrowing costs for businesses.
According to him, lending rates of between seven and nine per cent would significantly reduce the cost of credit and stimulate private sector investment.
He also commended the Bank of Ghana (BoG) for the steps taken so far to stabilise the economy, but said more work remained to ensure that businesses benefited from the improving macroeconomic environment.
The President of the Traders Advocacy Group Ghana (TAGG), David Kwadwo Amoateng, also said lending rates in Ghana remained high despite recent improvements in economic indicators.
He said many commercial banks continued to charge lending rates ranging between 22 and 25 per cent, even as inflation declined and macroeconomic stability improved.
“We met the Governor and told him it was time for the banking supervision authorities to engage the commercial banks so that their lending rates would reflect the improvements in the economy,” he said.
Mr Amoateng said the current lending environment placed Ghanaian businesses at a disadvantage within the African Continental Free Trade Area (AfCFTA).
“With the AfCFTA headquarters located in Ghana, our businesses were competing in the same market with firms from other African countries, yet the cost of credit here remained significantly higher,” he said.
He observed that businesses in Kenya accessed credit at approximately eight per cent, whereas lending rates in Nigeria ranged between 15 and 17 per cent.
Mr Amoateng said developments in the country’s financial infrastructure should encourage banks to lower lending rates further.
He pointed to the expansion of digital systems such as the Ghana Card, which had improved traceability and made it easier for financial institutions to assess borrowers.
“The introduction of digital identification systems improved transparency in the financial system and reduced some of the risks associated with lending,” he said.
According to him, these improvements should help banks price loans more competitively and expand access to credit for businesses.
He added that the government, the Bank of Ghana and the Ministry of Finance had made progress in stabilising the economy, but commercial banks must reflect the changes in their lending decisions.
Mr Amoateng said lower lending rates would enable businesses to expand production and increase their participation in regional trade.
Impact on bad loans
Some financial analysts also said the gradual decline in lending rates could support the stability of the banking sector.
They explained that lower borrowing costs could improve businesses’ ability to service their loans and reduce the number of non-performing loans (NPLs) within the banking system.
“When borrowing costs declined, businesses found it easier to repay their loans and that helped reduce the level of bad loans on the books of banks,” an analyst said.
According to them, even small reductions in lending rates could ease repayment pressures on companies that relied heavily on credit.
They added that if the decline in the reference rate continued, more banks were likely to review their lending rates in the coming months.
Meanwhile, the Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, said the banking sector had developed a roadmap to reduce non-performing loans to about 10 per cent by the end of 2026.
He made the remarks when he appeared before Parliament’s Committee on Economy and Development last Monday.
Dr Asiama said the NPL ratio had already declined from 21.8 per cent at the beginning of 2025 to 18.9 per cent by December 2025.
“The reduction in non-performing loans strengthened bank balance sheets and created room for more lending to businesses and households,” he said.
He added that continued improvements in the economy and stronger supervision of banks would help sustain the downward trend in bad loans and strengthen confidence in the financial sector.
Source:
www.graphic.com.gh