A sharp collapse in Ghana’s Treasury bill rates is quietly reshaping the country’s banking landscape.
While the government enjoys cheaper borrowing costs, banks that relied heavily on high-yield government securities are seeing their once-lucrative strategy fade, potentially opening the door for greater lending to businesses.
For years, many banks in Ghana made comfortable returns by channeling customer deposits into government securities rather than lending to the private sector. But with Treasury bill yields now falling sharply, that era of “easy money” appears to be ending.
The Sharp Drop in Treasury Bill Rates
Data from the latest auction report shows that the benchmark 91-day Treasury bill rate has dropped dramatically.
The yield, which hovered around 28% at the beginning of 2025, has plunged to roughly 4.7% by March 2026, a fall of more than 22 percentage points within a year.
The decline reflects improving macroeconomic conditions, easing inflationary pressures, and reduced borrowing needs by the government.
But while this is good news for public finances, it is squeezing the investment returns banks previously earned from government debt. The shift marks one of the most dramatic adjustments in Ghana’s short-term interest rate environment in recent years.
Banks’ Heavy Dependence on Government Debt
A recent disclosure by the Governor of the Bank of Ghana highlights just how deeply banks relied on Treasury bills.
The government securities accounted for about 62% of banks’ total investments in 2025, underscoring how financial institutions preferred lending to the government rather than extending credit to businesses.
The strategy was simple. Banks could mobilize deposits from customers and invest much of that money in Treasury bills, earning attractive returns with minimal risk.
When yields were near 27–28%, the profits were substantial and required far less effort than managing thousands of loans to businesses.
Why Banks Preferred Treasury Bills
From a risk management perspective, the attraction was obvious. The government securities are considered relatively safe, highly liquid, and easy to manage.
Unlike lending to businesses, they do not require detailed credit assessments, monitoring of borrowers, or the costly recovery processes that come with bad loans.
In other words, buying Treasury bills was a simpler and safer way to earn strong returns. However, critics argue that this trend gradually weakened the core function of banking.
The Banking System’s Forgotten Role
At its foundation, banking exists to channel savings into productive economic activity.
Banks collect deposits from households and investors and then lend those funds to businesses, farmers, manufacturers, and entrepreneurs who need capital to grow.
But when large volumes of deposits are directed toward government securities instead of private sector lending, economists say a “crowding-out effect” occurs.
In such situations, government borrowing absorbs financial resources that could otherwise support private enterprise.
For many small businesses across Ghana, this has translated into limited access to credit and high borrowing costs.
The New Reality After the T-Bill Crash
The steep fall in Treasury bill yields is now forcing banks to rethink that strategy. With returns from government securities shrinking, the once dependable profit engine is gradually losing its appeal.
Banks that became comfortable relying on government paper may now have to search for new sources of income.
For many analysts, that search will inevitably lead banks back to the private sector, the very place where banking traditionally plays its most important role.
A Possible Turning Point for SMEs
If the trend continues, small and medium-sized enterprises could be the biggest beneficiaries.
SMEs across Ghana frequently cite lack of access to affordable financing as one of their greatest obstacles. Many viable businesses struggle to expand simply because loans are either unavailable or too expensive.
A shift by banks toward lending to businesses could unlock significant opportunities for entrepreneurs and growing companies in sectors such as manufacturing, agribusiness, trade, and technology.
More credit flowing into these areas could stimulate production, create jobs, and support broader economic growth.
