Banks in Ghana are showing a growing willingness to lend across all sectors, yet inconsistent government policies are increasingly undermining the progress of businesses, according to Lawrence Sackey, Research Manager at the Ghana Association of Banks (GAB).
While interest rates have dropped significantly in recent months, offering opportunities for businesses to access credit more affordably, the changing policy landscape has created significant repayment risks, particularly for manufacturing and service providers engaged with government projects.
“Even though the appetite is there to lend to manufacturing, the risk is the duration of some of these loans,” Sackey explained. Many businesses take loans to provide goods or services to government programs, such as the SHS initiative or construction projects.
However, changes in government or shifts in policy often result in delayed payments or cancellations, leaving borrowers unable to meet their obligations. “You may provide services or products to the government, and if there’s a change in government, it can result in bad loans,” he added, highlighting the structural challenges facing enterprises reliant on state contracts.
The caution among banks is evident. Despite improved lending conditions, financial institutions remain wary of extending long-term credit to sectors exposed to government-dependent revenues.
Sackey noted that without critical policy safeguards, “loan cycles may align with inflation cycles, where banks are unwilling to give long-term credit beyond a political or electoral cycle.” This dynamic not only constrains investment in production and manufacturing but also discourages businesses from expanding, limiting economic growth and industrialisation efforts.
Industry experts warn that while credit availability is improving, the underlying uncertainty created by inconsistent policy enforcement, abrupt program changes, and fluctuating government commitments is eroding the confidence of both lenders and borrowers.
Banks prefer short-term or low-risk loans, often diverting capital toward import-driven businesses where repayment is more predictable, leaving domestic manufacturers struggling to access the financing needed for growth.
He emphasised that for Ghana’s industrial and service sectors to thrive, a stable and predictable policy environment is essential. Businesses must be assured that contracts and programs will be honoured regardless of political cycles, and banks must feel confident that loans extended to enterprises will be repaid on schedule.
Without such consistency, the country risks perpetuating a cycle where credit exists in theory but fails to translate into sustained business development, job creation, and economic diversification
