A deeper analysis of the June 2025 Annualised Percentage Report (APR) published by the Bank of Ghana has revealed that Small and medium-sized enterprises (SMEs) in Ghana looking for cheaper credit may find foreign-owned banks holding a slight edge.
This is true on the surface; however, the real story is quite complicated and more nuanced.
The Bank of Ghana’s June 2025 Annualised Percentage Rate (APR) report shows that, when the true cost of credit is compared, including interest plus other fees and charges like processing fees, insurance, risk, and others, foreign banks generally post slightly lower average APRs for SME loans.
However, the story is not the same across all loan tenors or durations.
1-Year Tenor
For 1-year SME loans, foreign banks averaged 33.93% APR against locals’ 34.76%, a gap of about 0.83 percentage points. Although the gap may look small, it is enough to save thousands of cedis in interest and charges over just a year.
5-Year Tenor
At 5 years, the gap widened to roughly 7 points. The APR of foreign banks averaged 31.47% against indigenous banks, which averaged 38.43%. It is important to note that this picture was highly influenced by a high outlier from the Agricultural Development Bank (ADB) that charged as high as 46%.
3-Year Tenor
However, in the 3-year tenor, the tables turned. Local banks edged marginally ahead with a 32.07% average APR compared to 33.12% for foreign-owned lenders. This represents a 1.05 percentage point difference. On the median, which takes out the extreme figures of some banks, locals also fared better, suggesting that while some local offers are very expensive, the “typical” local loan may actually be cheaper than the “typical” foreign one.
What this means for SMEs
For business owners and SMEs, this is a huge insight. Never assume one type of bank will always be cheaper. A foreign lender may have the lowest advertised APR for a 1-year working capital facility, but a local bank could undercut them on a 3-year expansion loan.
The differences, maybe small in percentage terms, can make a big impact on cash flow, investment capacity, and competitiveness, especially in a high-interest economy like Ghana’s.
Possible impact on the banking sector and economy
This has implications for the economy and the banking sector. If SMEs increasingly chase lower APRs from foreign banks, competition could intensify, pushing local banks to either cut rates or justify higher pricing through better service, faster approvals, or sector-specific products.
Over time, greater competition could narrow spreads, making credit more affordable across the board.
The Bottom Line
Cheaper SME credit is more than a win for entrepreneurs. It can boost investment, job creation, and tax revenues, feeding directly into Ghana’s economic growth. But with average APRs still north of 30%, the cost of capital remains a major hurdle.
For now, SMEs must be smart by shopping widely, negotiating hard, and refusing to take the first offer.
