It has been one year since Ghanaians went to the polls to elect John Dramani Mahama as president, and 12 months, the government has made a concerted effort to reform the country’s private-sector environment, aiming to simplify business operations, strengthen support for SMEs, and expand access to credit. While progress has been recorded on paper, the reality on the ground presents a more challenging story.
Despite government initiatives to improve private-sector financing, many small and medium-sized enterprises continue to struggle with prohibitively high borrowing costs. According to the Institute of Statistical, Social and Economic Research (ISSER), “lending rates remain highest across the sub-region and do not support private sector development.”
Reports indicate that interest rates for SMEs often range from 17% to as high as 45%, a level that significantly constrains operational expansion and investment opportunities. Many small businesses describe these rates as crippling, limiting their working capital and preventing them from scaling operations effectively.
The chief executive of the Ghana Chamber of Young Entrepreneurs (GCYE), Sherif Ghali, highlighted the challenge, noting: “For me, it is so high and high borrowing capital eats into working capital, suppressing expansion. If the first option to get funding is traditional banks, and they are offering rates this high, it is not good.” He further warned that, “this does not augur well for encouraging an entrepreneurial economy.”
As few as 22% of SMEs are reported to secure formal credit, leaving the vast majority to rely on personal savings or informal loans, a situation that perpetuates slow growth and low productivity. Even when credit is theoretically available, stringent collateral demands, short loan tenors, and strict credit-history requirements continue to block access, leaving many firms with limited alternatives to finance growth.
In response, the Mahama government has implemented reforms intended to widen access to credit. Updates to the Borrowers and Lenders Act now allow a broader range of assets, including inventory, equipment, receivables, and vehicles, to be used as collateral, rather than limiting access to landed property alone.
A senior official noted that “it doesn’t only have to be landed property,” a policy shift aimed at opening loan opportunities for businesses lacking real estate holdings. Registrations under the expanded collateral registry have surged, with over 372,000 borrowers, many of them women-owned enterprises, now able to leverage movable property to secure financing.
While these reforms mark progress, analysts point out that without proper record-keeping, formal registration, and stable cash flows, the practical benefits for SMEs remain limited. As one SME analyst observed, “Entrepreneurs often treat business proceeds as personal income, leading to cash flow crises when operational costs arise.”
The administration has also taken steps to ease the broader tax and regulatory burden on businesses. In 2025, the government repealed several contentious levies, including the electronic transaction levy and the COVID-19 levy, providing relief for businesses and consumers alike.
Complementing these measures, the Mahama administration introduced the 24-hour economy initiative, aimed at enabling industries and businesses to operate round the clock. By formalizing night-market operators under a modified taxation scheme and providing additional support for industrial operations, the government seeks to expand domestic production, reduce import dependence, and create more employment opportunities.
The Trade Minister emphasized that these reforms are designed to stimulate manufacturing, optimize resource utilization, and enhance productivity through continuous operations.
While these initiatives signal a commitment to fostering a more business-friendly environment, substantial challenges remain. High interest rates, limited access to affordable credit, and gaps in regulatory implementation continue to inhibit SME growth, especially for youth-owned, rural, and informal businesses.
Reliable electricity supply, efficient public services, and consistent enforcement of new taxation policies are critical to realizing the full potential of the 24-hour economy. Since December 2024, nominal private-sector credit has grown, with outstanding loans reaching GH¢92.2 billion by April 2025, up from GH¢77.9 billion the previous year. Yet for many SMEs, the high cost of borrowing, limited collateral options, and administrative complexities continue to restrict meaningful access to financing.
While policy reforms and legal frameworks have been strengthened, the tangible impact on day-to-day business operations remains limited for a significant portion of the private sector.
