For the average Ghanaian entrepreneur, small business owner, and even households, Ghana’s lending rates continue to be relatively high despite improved macroeconomic conditions.
Conditions that play significant roles in determining lending rates, such as inflation has plummeted to 3.4%, the Bank of Ghana’s Monetary Policy Rate stands at 14.0%, and the Ghana Reference Rate (GRR) has dipped to a promising 10.03% as of May 2026.
On paper, the cost of borrowing should be tumbling. Yet, when these same business owners walk into a commercial bank, they are often met with lending rates still hovering in the high double digits, averaging around 19.7%.
Amid this irony, banking and financial consultant Dr. Richmond Atuahene is arguing that this stark contrast is no accident. In a recent analysis, he reveals that while the “official” cost of money is falling, there are certain, most often overlooked factors at play keeping lending rates higher.
He mentions that factors such as structural inefficiencies, bad debts, and rigid regulations are acting as a handbrake on cheaper credit.
The Bad Debt Tax: The Role of High NPLs
One of the most significant barriers to lower interest rates, according to Dr. Atuahene, is the staggering level of Non-Performing Loans (NPLs). He cites that as of February 2026, the NPL ratio in the Ghanaian banking sector sat at 18.7%.
This means that nearly one out of every five loans isn’t being paid back. In such a case, he explains that banks don’t just absorb the loss; they pass the risk onto everyone else.
According to Dr. Atuahene, high default rates compel banks to add a high-risk premium to their loans. Essentially, the credible borrowers are paying an undue “tax” to cover the risk of those who default, and hence, keeping the overall cost of borrowing high despite the falling policy rate.
The Locked-Up Cash: Reserve Requirements
Another “hidden” factor keeping rates high is the Cash Reserve Requirement (CRR). Currently, the Bank of Ghana mandates that banks hold between 15% and 25% of their deposits at the Central Bank.
Dr. Atuahene reveals that these reserves are unremunerated, meaning they sit at the Bank of Ghana earning zero interest for the commercial banks.
Because this significant portion of their capital is “sterilized” and unavailable for lending, banks are forced to charge more on the remaining funds they can lend to maintain their margins.
Dr. Atuahene notes that these requirements are intended for liquidity and financial stability, but they undeniably restrict the flow of affordable credit to the private sector.
Operational Headaches and Legal Red Tape
Other factors, the financial consultant reveals, are the sheer cost of running a bank in Ghana and judicial challenges in retrieving bad loans. Dr. Atuahene indicates that these two remain a massive hurdle, pushing lending rates higher.
Operational expenses, driven by high administrative, technology, and utility costs, hover at over 50% of income. These costs, alongside various levies and taxes, eat into what can be described as “topline” interest income, making it difficult for banks to slash rates significantly.
Furthermore, the judicial system offers little relief for banks trying to recover bad debts. Dr. Atuahene highlights that it can take three to seven years to reach a final judgment in a loan recovery case.
Even when a bank wins, auctioning collateral is often stalled by bureaucratic delays, corruption, or legal interference.
This lack of specialized banking knowledge in the courts and the inability to quickly recover assets further pushes up the risk premium that every borrower must ultimately pay.
The Way Forward: Breaking the Cycle
The banking and financial consultant believes that the country must find ways to bridge the gap between a 10% GRR and a 20% lending rate.
He therefore suggests a multi-pronged approach, including a policy intervention by the BoG to reduce the cash reserve requirement to free up more funds for the private sector.
He also suggests that commercial banks should be encouraged to align their internal base rates more closely with the declining GRR as their own cost of funds drops.
