While the government is enjoying the significant dip in the interest rate on the short-term instrument, T-Bills, it is emerging that banks are taking a major hit.
For years, Ghana’s banking sector has been quietly enjoying what can be described as “easy money.” These banks mobilized massive deposits from the public but often avoided the demanding work of lending to businesses.
They instead channeled much of those funds into risk-free government securities, particularly treasury bills, a situation many analysts have described as lazy banking.
The Twist
Now, that comfortable strategy may be coming to an end. Checks by The High Street Journal indicates that the yield on Ghana’s benchmark 91-day Treasury bill has experienced a dramatic decline over the past year.
The rate, which stood at roughly around 28% at the start of 2025, has dramatically declined to about 4.8% currently, according to the latest auction report in March 2026. This steep drop, which is over 22 percentage points in about a year, reflects improving macroeconomic conditions, easing inflation, and reduced government borrowing costs, but it also significantly compresses returns for banks and investors who previously relied on high-yielding government
A recent disclosure by the Governor of the Bank of Ghana reveals the extent of banks’ dependence on government securities. Treasury bills accounted for about 62% of banks’ total investments in 2025, highlighting how heavily financial institutions relied on lending to the government rather than supporting private sector activity.
In simple terms, this means that when yields on Treasury bills were around 27% in early 2025, a bank could collect deposits from customers, invest most of that money in government bills, and earn 27% on that deposit easily.
The Risk Justification
Some analysts believe that, from a risk-management standpoint, the preference for treasury bills is easy to understand.
This is because government securities are backed by the state, highly liquid, and relatively simple to manage. Unlike lending to businesses, they do not require extensive credit assessments, monitoring of borrowers, or costly recovery efforts when loans go bad.
However, some economists argue that the core purpose of banking goes far beyond collecting deposits and buying government paper and making a profit on them.
The “Abandoned” Intermediate Role
At its most fundamental level, a banking system exists to intermediate capital. This involves mobilizing funds from those with excess savings and channeling them into productive investments such as businesses, farms, factories, and innovation.
However, the banks have failed to do this. They would rather park large portions of deposits in government securities, while the private sector often suffers.
Economists describe this phenomenon as the “crowding-out effect,” where heavy government borrowing absorbs financial resources that would otherwise be available for private businesses.
This means entrepreneurs and small firms, often the backbone of Ghana’s economy, struggle to access affordable credit while banks enjoy comfortable returns from government debt. Some analysts say the situation also reflects deeper structural issues in the economy.
The New Wind After the Dip in the Government Securities Business
Some analysts believe that with a fall in the T-bill rate, the landscape is now changing. With improving macroeconomic conditions and declining treasury bill yields, the once-lucrative strategy of parking funds in government securities is becoming less attractive.
What used to be a reliable profit engine is gradually losing steam. It is a signal that banks that grew accustomed to earning easy returns from government debt must rethink their business models and search for new sources of profitability.
That search may inevitably lead them back to where banking traditionally belongs, which is the private sector.
If treasury bill returns continue to fall, financial institutions may have no option but to redirect capital toward lending to businesses and individuals. While this transition could pose operational challenges for banks, especially those that reduced their lending capacity over the years, it may bring a welcome boost to the broader economy.
The Bottomline
For small and medium-sized enterprises (SMEs) in particular, the development could be transformative. SMEs frequently cite limited access to credit as one of the biggest obstacles to growth. Many viable businesses fail to expand simply because financing is either unavailable or prohibitively expensive.
A shift by banks toward business lending could therefore unlock new opportunities for entrepreneurs, startups, and expanding companies across sectors such as manufacturing, agribusiness, trade, and technology.
To put it simply, the decline in treasury bill yields may signal the end of “lazy banking” but the beginning of a more dynamic financial system where the real sector actually benefits.
