In a very welcoming development for both businesses and consumers alike, the lending rate, which measures the cost of borrowing in Ghana, is finally easing, offering hope of relief for Ghanaians.
Businesses that heavily rely on loans are seeing cheaper borrowing costs as the Bank of Ghana’s May 2025 Summary of Economic and Financial Data shows that the average lending rate has dropped significantly from 30.07% in January to 27.40% in April.
The 27.40% marks the steepest four-month decline in recent years.
The Trend
Average lending rates started the fiscal year at 30.07% in January. The rate slightly increased to 30.12% in February. The next two months have witnessed consecutive drops in the rate. It fell to 29.18% in March and further dropped to lowest in many month, 27.40% in April.
This is a 2.67 percentage point decline in just four months, driven by continued monetary easing, improved liquidity in the banking system, and macroeconomic stability. Businesses, on average, are now relatively paying less interest on loans, which is a welcome relief.
More interestingly, this development comes at a critical time when the Ghana cedi is also appreciating steadily against major foreign currencies. This also confirms the economy’s recovery and the stabilization of the macroeconomic environment.
A Dropping Cost of Borrowing & A Gaining Cedi : Why Prices Must Drop
A declining lending rate means that banks are charging less interest on loans to businesses and individuals. For companies, especially in retail, manufacturing, and logistics, lower interest expenses should translate into reduced cost of production and operations, giving them room to pass on the savings to consumers.
In the same breath, with the cedi strengthening, the cost of importing finished goods and inputs is declining, which should further ease inflationary pressures.
Some economists and analysts argue that the confluence of these two key indicators, lower lending rates and a stronger currency, should begin to reflect in reduced prices of goods and services, especially those influenced by financing and import costs.
Retailers and suppliers have less excuse to hold prices constant at a time when borrowing is getting cheaper and forex pressure is reducing.
Is the 27.40% Enough?
Although Ghana’s average lending rate has declined to 27.40% as of April 2025, reflecting a steady drop from the 30.07% recorded in January, it is evident that it is still uncompetitive compared to the country’s peers. While this downward trend is a positive signal for the economy, the current rate remains significantly higher than those of peer economies such as Nigeria (17.96%), Kenya (15.77%), and South Africa (7.5%).
This disparity raises concerns about Ghana’s regional competitiveness, particularly for businesses and consumers reliant on credit to finance operations or major purchases.
Businesses from Ghana cannot be competitive with the rate if they want to take advantage of the opportunities under the African Continental Free Trade Area (AfCFTA). The government must therefore deliberately work to bring down the rate further.
Moving Forward
It is the prayer of every consumer and business to see the trend continue. Should that be the case, Ghanaian businesses may soon find borrowing even more attractive, potentially spurring investment, expansion, and job creation.
However, the true test lies in whether the benefits of cheaper capital are passed on to consumers.
