Rising insecurity across the Sahel could weigh on Ghana’s economic outlook in 2026 and intensify stress within the banking sector by worsening already elevated non-performing loans, the Ghana Association of Banks (GAB) has warned.
In its 2026 Industry Outlook, GAB said instability in Mali, Burkina Faso and Niger continues to generate spillover risks for coastal West African states, even where large-scale militant attacks have not materialised. Ghana, it noted, faces heightened vulnerabilities along its northern borders, including increased cross-border movements, logistical disruptions and security-related pressures linked to the wider Sahel crisis.
“Rising insecurity in Mali, Burkina Faso, and Niger continues to pose spillover risks for coastal West African states,” the report said.
According to GAB, border-area incidents, persistent ethnic tensions such as those in Bawku, and refugee inflows estimated at over 110,000 across coastal states are already dampening investor confidence. These developments raise insurance and transport costs along key trade corridors, disrupt supply chains and weaken investment appetite in mining, logistics and agriculture-linked activities, particularly in northern and transit regions.
While Ghana has not experienced large-scale militant attacks, GAB stressed that indirect spillovers can still carry meaningful economic and financial costs. Slower activity in border regions reduces household incomes and corporate cash flows, directly affecting borrowers’ capacity to service existing bank loans.
For the banking sector, the association warned, these pressures risk aggravating non-performing loans at a time when asset quality remains fragile following the Domestic Debt Exchange Programme (DDEP). Businesses exposed to cross-border trade face higher operating costs and periodic disruptions, while households in affected regions encounter income instability, increasing default risks across loan portfolios.
“Without effective containment, security spillovers could undermine Ghana’s projected growth of over 4 percent in 2026 and exacerbate already elevated post-DDEP non-performing loans, placing renewed strain on bank liquidity,” GAB said.
The report explained that rising NPLs would force banks to increase provisioning, tying up capital and reducing profitability. Higher provisioning requirements, in turn, limit banks’ ability to extend new credit, tightening financial conditions for the private sector and slowing economic activity in precisely the regions most exposed to security risks.
GAB cautioned that this interaction could create a reinforcing cycle where insecurity weakens economic activity, rising defaults push up NPLs, and tighter bank lending further suppresses growth, increasing the likelihood of additional loan deterioration. If prolonged, the pressure could extend beyond border regions and weigh on system-wide liquidity and balance sheet resilience.
Looking ahead, GAB said managing the interplay between regional security risks, asset quality and liquidity will be critical to sustaining Ghana’s recovery.
Without effective containment of spillovers from the Sahel, the association warned that gains from macroeconomic stabilisation could be undermined by renewed stress in bank balance sheets and a slower pace of credit expansion.
