At the recent Kwahu Business Forum, the Governor of the Bank of Ghana, Dr. Johnson Asiama, made a hopeful and strong statement that the BoG is working tirelessly to engineer a very low interest rate for businesses and households.
Dr. Johnson Asiamah revealed that it is his everyday morning prayer to leave a legacy that ensures the interest rate is brought down to below 10%.
“That is my prayer every morning, that rates should drop 10% below,” the governor announced at the 2026 edition of the Kwahu Business Forum.
It is an ambition that resonates deeply with businesses and households alike. From entrepreneurs struggling to access credit to individuals burdened by expensive loans, high interest rates remain one of the most pressing economic challenges.
Amid this commitment by the governor, a detailed analysis by banking and financial expert Dr. Richmond Atuahene suggests the problem is far more complex than a single policy shift. According to him, Ghana’s high lending rates are driven by a combination of structural, financial, and institutional factors.
In his latest paper on the subject of high interest rates, Dr. Richmond Atuahene identified the eight major factors causing such inimical interest rates in Ghana’s economy. These structural, financial, and institutional factors must be tackled holistically before the Governor’s prayer would be answered.
Here are the eight key reasons he identifies:
1. High Inflation and Tight Monetary Policy
When inflation rises, the central bank responds by increasing its benchmark rate to control prices. This is exactly what the Bank of Ghana did when inflation surged above 50% in 2022, pushing its policy rate as high as 30% in 2023.
Although the rate has since dropped to around 14%, banks are still lending at high rates. In simple terms, when it is expensive for banks to borrow, it becomes expensive for customers to take loans.
2. Heavy Government Borrowing (‘Crowding Out’)
Dr. Atuahene identifies that the persistent high government borrowing from the domestic market has made the situation worse.
Instead of lending to businesses, banks often prefer to lend to the government through treasury bills because it is safer and more predictable. This reduces the amount of money available to private businesses and pushes lending rates higher.
3. High Non-Performing Loans (NPLs)
Another structural and institutional factor the financial analyst identifies is soaring Non-Performing Loans (NPLS). In simple terms, banks in Ghana are dealing with a significant number of unpaid loans.
To protect themselves, they increase interest rates on new loans to cover potential losses. This means responsible borrowers end up paying more because of those who default.
4. Currency Depreciation and Economic Instability
Ghanaians also pay for the weak cedi through high interest rates. The weakening of the Ghanaian cedi over the years has increased uncertainty in the economy.
When the currency is unstable, banks factor in the risk by charging higher interest rates, especially for businesses that depend on imports.
5. High Operational Costs
The former banking executive reveals that running a bank in Ghana is very expensive. From staff salaries to rent, utilities, taxes, and loan loss provisions, these costs are high.
Banks pass these expenses on to customers through higher lending rates.
6. High Cash Reserve Requirements (CRR)
Dr. Atuahene further explains that banks are required to keep a portion of their deposits with the central bank, and they earn no interest on it.
This reduces the amount of money available for lending and acts like a hidden cost. To recover this, banks increase the interest rates on the loans they do give out.
7. Inefficient Judicial System
Recovering loans through the courts can take years, sometimes between three and seven years. Dr. Atuahene identifies that delays, legal bottlenecks, and challenges in enforcing collateral make lending riskier.
As a result, banks charge higher interest rates to compensate for these risks.
8. Structural Weaknesses in the Financial Sector
Ghana’s financial system lacks sufficient long-term funding options. Combined with regulatory pressures and legal challenges, this raises the overall cost of lending and limits access to affordable credit, especially for small businesses.
The Bottomline
Dr. Atuahene’s analysis is a clear indication that reducing interest rates in Ghana is not just about lowering the central bank’s policy rate.
While the vision outlined by Dr. Johnson Asiama is achievable, it will require coordinated reforms, ranging from improving the legal system to reducing government borrowing and stabilizing the macroeconomic environment.
For now, the reality remains that Ghana’s high interest rates are deeply rooted in the structure of the economy itself.
He therefore maintains that until these underlying issues are addressed, the dream of affordable credit for businesses and households may remain just a dream.
