Governor of the Bank of Ghana, Dr. Johnson Asiama, has called on banks to shift away from excessive investments in government securities and instead channel more financing to productive private sector ventures.
He said this was essential to support Ghana’s economic recovery, promote growth, and improve the effectiveness of monetary policy.
Speaking at the launch of the Bank of Ghana Chair in Finance and Economics at the University of Ghana, Dr. Asiama said banks must re-evaluate their business models, which currently favour lending to government over local businesses.
He disclosed that as of June 2025, bank loans totalled GH¢89.16 billion, while investments in government and central bank securities had risen to GH¢162.92 billion. This, he warned, represents a dangerous imbalance that limits credit to the private sector and weakens monetary policy transmission.
“Across the region, we see a sharp rise in banks’ holdings of government debt, from 20% of credit portfolios in 2010 to over 35% in 2023. Ghana mirrors this trend,” he said.
“This reflects a worrying skew towards risk-free assets, which crowds out private sector credit and dulls the potency of monetary policy transmission,” he added.
Dr. Asiama stressed that sustained high interest rates are unsustainable and urged banks to adopt more targeted lending to Ghanaian enterprises, which will drive growth and improve financial inclusion.
“Our banking sector must become a catalyst for growth, with more targeted and productive lending to Ghanaian enterprises,” he said.
The Governor also reflected on the macroeconomic volatility of recent years, pointing to the severe depreciation of the cedi in 2022 and inflationary shocks.
However, he noted that the economy had rebounded in 2025, with the cedi appreciating by over 42% year-to-date and international reserves surpassing US$11 billion.
“This resurgence is evidence of how disciplined monetary-fiscal coordination, supported by the IMF programme, can stabilise our economy,” he said.
Dr. Asiama described the launch of the Bank of Ghana Chair in Finance and Economics as a strategic investment in evidence-based policy and academic collaboration. He said the Chair would play a critical role in shaping sound economic decisions through research.
“The inauguration of the Bank of Ghana Chair at the University of Ghana is not a beginning; it is a continuation and deepening of a longstanding relationship between two institutions with shared responsibility for national development,” he said.
In his inaugural address, Prof. Yegandi Imhotep Paul Alagidede, the newly appointed Chair in Finance and Economics, proposed bold reforms to strengthen the national currency.
He urged lawmakers to pass the Endogenous Resource-Backed Currency (ERBC) Act, which would require at least 30% of Ghana’s natural resources to back the cedi.
“To our lawmakers and bankers, pass the ERBC Act mandating a 30% minimum resource backing. Construct District Reserve Vaults from Bolga to Kumasi, under blockchain surveillance. Launch ‘Grow Your Currency’ bonds that allow citizens to invest in themselves, land-backed, labour-linked, legacy-powered. No more begging. No more borrowing.”
