Ghana’s sharp decline in interest rates is improving financial conditions for businesses, but the bigger test for the economy is whether the gains can remain stable long enough to encourage investors to commit capital for the long term.
The Bank of Ghana’s Monetary Policy Rate has fallen by 14 percentage points, from 28% in June 2025 to 14% in June 2026, as inflation eased and macroeconomic conditions improved.
The reduction has also fed through to borrowing costs, although not fully at the same pace. Average bank lending rates fell from 27% to 15.64% over the same period, while the 91-day Treasury bill rate dropped from 14.74% to 5.27%.
The figures point to a significant repricing of money in Ghana’s financial system, but they also highlight an important question for investors: how durable are the conditions behind the lower cost of capital?
For a company considering a factory, mine, power project or other investment with a long payback period, today’s interest rate is only one part of the calculation. Investors also have to estimate future inflation, exchange rates, financing costs, taxes and regulatory conditions over the life of the project.
The greater the uncertainty around those variables, the greater the return investors typically require to compensate for the risk.
That can raise the cost of capital and determine whether a project is financially viable in the first place.
Economist and MTN Ghana Board Chairman Dr Ishmael Yamson, speaking on Joy News’ PM Express on Tuesday, said Ghana must demonstrate at least a decade of economic stability if it wants to attract serious long-term investors.
“Unless we can demonstrate to investors that we can maintain stability for a minimum of 10 years, we will go nowhere,” Yamson said.
His argument comes at a time when Ghana’s financial conditions have improved considerably.
The fall in the policy rate from 28% to 14% represents a halving of the central bank’s benchmark over 12 months. At the same time, the 91-day Treasury bill rate has fallen by almost 10 percentage points, reducing the government’s short-term borrowing cost and providing a much lower benchmark for financial markets.
But lending rates have not fallen by the same magnitude.
The average bank lending rate declined by 11.36 percentage points, compared with the 14-percentage-point reduction in the policy rate.
That gap matters because it shows that monetary policy easing does not automatically translate into an equivalent reduction in the cost of credit for businesses.
Banks still have to price for funding costs, operating expenses, credit risk and the capital they must hold against their loans.
Credit risk, however, is moving in the right direction.
The banking sector’s non-performing loan ratio fell from 23.1% in June 2025 to 16.1% in June 2026, a reduction of seven percentage points.
The improvement reduces some of the pressure on lenders to maintain large risk premiums. But the level remains elevated, meaning credit risk continues to be an important consideration in the pricing of loans.
For investors, the broader implication is that lower rates alone do not determine the cost of capital.
An investor looking at Ghana has to assess not only the return available today but also the likelihood that the economic environment will remain predictable throughout the investment period.
Yamson said serious investors operate on horizons far longer than Ghana’s political cycle.
“If it’s an investor that means business, sets up a factory, employs people, he’s thinking 30 years, 40 years,” he said.
That distinction is important for an economy seeking to attract more productive foreign direct investment.
Portfolio capital can respond relatively quickly to changes in yields, currencies and market sentiment. A company that has invested millions of dollars in a factory or mine cannot exit with the same ease.
Long-term investors therefore place greater weight on the stability of the assumptions behind their financial models.
A sustained period of lower inflation and exchange-rate stability can make it easier for businesses to forecast revenues and costs. Stronger international reserves can provide greater protection against external shocks, while fiscal discipline can reduce concerns about future tax increases, financing pressures or macroeconomic instability.
Ghana has made progress on several of these fronts.
The International Monetary Fund has pointed to fiscal consolidation, progress on debt restructuring and improved confidence in the cedi as part of the country’s recent stabilisation. The World Bank has also reported that Ghana’s economy expanded by 6% in 2025.
But for investors, the issue is increasingly shifting from whether Ghana can stabilise to whether it can stay stable.
That distinction can influence the risk premium attached to Ghanaian investments.
If investors become more confident that inflation, exchange rates, fiscal policy and the broader regulatory environment will remain predictable, the return they demand for taking on Ghanaian risk could fall.
That would make more long-term projects financially viable and could improve the country’s ability to compete for capital against other emerging and frontier markets.
Yamson has argued that Ghana must build resilience around the current recovery rather than rely on short-term measures whenever economic pressures emerge.
He cited the accumulation of foreign-exchange reserves as one potential pillar of that resilience, saying achieving 15 months of import cover by 2028 would strengthen the country’s ability to withstand future shocks. He acknowledged, however, that the Gold for Reserves programme carries risks.
The issue is particularly important now because Ghana’s monetary easing has created more favourable financial conditions.
The policy rate has fallen sharply. Treasury yields have declined. Lending rates have come down. Credit quality has improved.
The next question is whether investors will believe those conditions can last.
For an investor considering a 10-, 20- or 30-year project, a year of economic stability can improve sentiment. A sustained track record of stability can change the way that investor prices risk.
And that could ultimately determine whether Ghana’s current recovery produces more than better economic indicators, whether it translates into the long-term capital needed to build factories, expand businesses, finance infrastructure and deepen productive capacity.
