For almost a year, Ghana’s banking sector was on what can be described as a successful mission of dealing with its “fat” Non-Performing Loans (NPLs).
Banks, for 8 months, have been steadily trimming their balance sheets. However, the latest Summary of Economic and Financial Data released by the Bank of Ghana on March 17, 2026, reveals a surprising plot twist that the consistent downward trend in Non-Performing Loans (NPLs) has hit a snag.
NPLs, commonly known as bad loans, have seen an uptick for the first time in 8 months, signaling a major concern for banks, borrowers, and the economy at large.
The U-Turn
Starting in mid-2025, the banking industry enjoyed a period of relative health. After peaking at a worrying 23.6% in May and June 2025, NPLs began a disciplined decline.
Month after month, the ratio of bad loans dropped, reaching a promising low of 17.9% in January 2026.
But the “honeymoon” period ended in February 2026. The latest data from the Bank of Ghana indicates that NPLs climbed back to 18.7%.
This uptick signifies that nearly one out of every five loans in the country is currently struggling, marking a potential shift in the credit environment.
Why This Matters for Your Business
While an uptick of 0.8% might seem small on paper, its real-world impact on the business community can be profound if the trend continues.
Experts explain that this can create tighter credit. Banks tend to get worried when they see defaults rising. Already, total advances saw a slight dip from GHC 111.0 billion in December 2025 to GHC 108.2 billion in February 2026.
This signals that if the NPLs continue to rise, businesses may find it much harder to secure new loans as banks prioritize safety over growth.
The situation could also put pressure on lending rates. Although the Average Lending Rate has been on a downward path, reaching 19.17% in February 2026, rising bad loans often force banks to maintain higher margins to cover potential losses.
This could halt the much-anticipated era of cheaper credit for SMEs.
Moreover, rising NPLs are often accompanied by decreased management efficiency. The industry’s Total Cost to Gross Income ratio already crept up from 71.2% in January to 73.8% in February. This indicates that banks are spending more to manage their operations, leaving less room for flexible financing options for businesses.
The Bottomline
Ghanaian businesses have recently shown high spirits, with the Business Confidence Index reaching 110.1 in February.
However, this renewed optimism faces a test. If the uptick in bad loans is merely a one-off, the economy’s recovery remains on track.
But if March and April continue this upward trajectory, the banking sector may have to tighten its belt once again, making the search for business capital much tougher.
