Ghana’s private sector is finally receiving more bank credit as falling Treasury bill yields have encouraged lenders to shift away from government securities.
However, it is emerging that despite the improvement in credit advances to the private sector, the biggest beneficiaries are not the productive industries expected to drive economic growth and job creation.
This is the revelation from John Defor, Director for Policy and Research at the Association of Ghana Industries (AGI), who says the recent improvement in private sector credit masks a worrying imbalance in how banks are allocating their loans.
Speaking during PwC Ghana’s review of the 2026 Mid-Year Budget, Mr. Defor acknowledged that lending to businesses has picked up significantly as government borrowing has become less attractive.
“The data supports an improvement in credit to the private sector, and it’s quite significant,” he said, adding that, “But if you interrogate the figures, it’s quite revealing.”
According to him, the bulk of bank lending is flowing into the services sector, which accounts for about 37% of total private sector credit, while trade, commerce and finance receive roughly 23%. Manufacturing, however, a sector widely regarded as the backbone of industrialisation and employment, accounts for just 11% of banks’ lending portfolios.
The disparity, he argued, raises concerns about whether the current flow of credit is supporting the sectors capable of transforming the economy.
With Treasury bill rates declining sharply, banks have fewer incentives to invest heavily in government securities and are increasingly turning to private sector lending. Yet, John Defor believes the shift has not translated into adequate financing for the real sector, particularly manufacturing.
“If you want to see better growth, we need regulations and laws that will push the banks to lend more to the private sector, and for that matter the real sector, where we can employ more people, produce more and generate a lot more revenue for government,” he stressed.
He noted that some countries require banks to allocate a minimum share of their loan portfolios to productive sectors through regulatory thresholds. Ghana, he said, does not operate such a framework, leaving lending decisions largely driven by commercial considerations.
For the AGI, increasing the volume of private sector credit is only part of the solution. Equally important is ensuring that more of that financing reaches manufacturers and other productive industries that create jobs, expand domestic production and strengthen Ghana’s long-term economic resilience.
