Ghana’s easing inflation and lower policy rate are yet to translate into affordable credit across the banking system, with community and microfinance banks charging significantly higher interest rates than universal banks, a September survey has found.
The survey by the Chartered Institute of Bankers, Ghana (CIB Ghana) found that most universal banks were lending at rates of 10% to 15%, compared with 21% to 25% at many community banks and approximately 31% to 40% at microfinance banks.
The disparity raises concerns about whether small businesses and informal enterprises, many of which depend on community-level lenders for working capital, can benefit fully from improving macroeconomic conditions.
While businesses borrowing from universal banks may access credit at relatively lower rates, those relying on community and microfinance institutions face significantly higher financing costs that could erode profits, limit expansion and constrain job creation.
Robert Dzato, Chief Executive Officer of CIB Ghana, presented the findings at the Institute’s third Post-Monetary Policy Committee (Post-MPC) Policy Seminar, following the Bank of Ghana’s decision to maintain the policy rate at 14% on September 24, 2026.
The survey found that 46% of community banks charged lending rates of 21% to 25%, up from 36% in the July survey, pointing to a widening financing burden for borrowers in that segment.
Smaller businesses face a steeper borrowing bill
The difference in lending rates has direct implications for businesses that need loans to purchase inventory, acquire equipment, expand operations and meet routine expenses.
High borrowing costs increase the amount businesses must earn before they can make a profit, potentially forcing smaller enterprises to delay investments, reduce operations or pass some of their costs on to consumers.
The pressure could be more severe for microfinance customers borrowing at rates of 31% to 40%, particularly those operating on thin margins with limited access to alternative sources of funding.
The findings highlight a challenge for monetary policy: a reduction in the central bank’s policy rate does not automatically make borrowing cheaper for every business.
Dr Ellen Ohene-Afoakwa, President of the CIB Ghana Governing Council, said monetary policy influenced businesses and households through financial markets and lending conditions, making the transmission of policy decisions to the wider economy critical.
“As an institute, we recognise that credit growth and credit quality must move together,” she said, calling for a banking sector capable of providing adequate credit to productive sectors while maintaining responsible lending practices.
She also emphasised the need for banks to prevent bad loans rather than focus primarily on recovering them after they had deteriorated.
Why policy rate cuts do not guarantee cheaper loans
In remarks read on his behalf by Dr Simon Harvey, Director of Research at the Bank of Ghana, Governor Dr Johnson P. Asiama said lending rates did not necessarily move in line with changes in the policy rate because banks also considered funding costs, credit risk, operating expenses and expected loan losses.
“This transmission is neither automatic nor instantaneous,” the Governor said.
He explained that monetary policy was intended not only to influence interest rates but also to anchor inflation expectations, maintain currency stability and safeguard the soundness of financial institutions.
These considerations help explain why lending rates can remain high even when the central bank’s policy rate is lower. However, for businesses, the practical concern is whether improvements in the broader economy will eventually translate into more affordable financing.
The September survey also showed that banks remained broadly confident about the economic outlook. About 65% of respondents expressed high confidence in the macroeconomic environment, while 80% considered the prevailing monetary policy stance effective in containing inflation.
Although 86% had expected the Monetary Policy Committee to maintain the policy rate, 70% anticipated an increase in inflation over the following three months, indicating that lenders remained alert to possible price pressures.
Banks balance lending growth with bad-loan risks
The survey also examined the banking sector’s ability to meet the Bank of Ghana’s directive to reduce non-performing loans (NPLs) to 10% by the end of 2026.
About 71% of respondents expressed confidence that their institutions would meet the target.
Mr Dzato welcomed the confidence but cautioned that stronger lending must be supported by effective credit monitoring, loan recovery processes and risk management.
“We are driving credit growth for obvious reasons,” he said, warning that loans not repaid on time could create further challenges for the sector.
The caution reflects the balancing act facing banks: extending credit to support businesses and economic activity while ensuring that borrowers can repay and that loan defaults do not undermine financial stability.
For smaller enterprises, however, the immediate challenge is the cost of accessing that credit.
The survey’s findings suggest that Ghana’s improving macroeconomic conditions are not translating into uniform financing costs across the financial system. While customers of universal banks generally face lower rates, businesses dependent on community and microfinance institutions continue to confront a substantially higher borrowing burden.
The policy challenge is therefore not simply to lower interest rates, but to improve the transmission of monetary policy and expand access to affordable credit without weakening lending standards or the stability of the banking sector.
