Viable small and medium-sized enterprises (SMEs) could face constraints in capitalising on Ghana’s planned US$10 billion New Economy investment programme if persistent barriers to bank financing limit their capacity to expand operations and participate in emerging investment opportunities.
President John Dramani Mahama announced in August that the government would invest US$2.5 billion annually over four years under its proposed New Economy programme, targeting seven strategic sectors. Agriculture and agro-processing are expected to receive US$5 billion, representing half of the planned investment.
The programme aims to strengthen productive capacity, create jobs and expand economic opportunities. However, the extent to which viable SMEs can contribute to this agenda will partly depend on their ability to secure financing for equipment, inventory and business expansion.
The concern follows a warning by the Bank of Ghana (BoG) on October 17 that credit risks, weak financial records and limited collateral continue to constrain lending to SMEs despite improving economic conditions.
Bank of Ghana Governor Dr Johnson Pandit Asiama said banks continued to exercise caution in lending to SMEs, particularly in agriculture, transport and construction, where repayment risks remain elevated. According to the Ghana News Agency (GNA), he noted that “banks continue to exercise caution in credit underwriting, especially in sectors with elevated repayment risks such as agriculture, transport and construction.”
The challenge for the government is to ensure that its investment programme addresses these barriers rather than leaving businesses to compete for financing on existing terms.
Turning Public Investment Into Private-Sector Credit
Government spending could create opportunities for banks to expand SME lending if investments generate reliable demand for goods and services, strengthen business cash flows and establish commercially viable projects.
For instance, investment in agriculture and agro-processing could create demand for farmers, transport operators, packaging companies, equipment suppliers and other local businesses. These enterprises would need financing to increase production and meet new supply requirements.
However, the emergence of these opportunities does not guarantee that banks will provide the necessary credit. Businesses may still struggle to demonstrate sufficient cash flow, produce formal financial statements or provide the collateral required by lenders.
The government could help bridge this gap through credit guarantee arrangements, risk-sharing facilities and targeted financing programmes that reduce the potential losses banks face when lending to viable but underserved businesses. Improved payment systems for government contractors and suppliers could also help SMEs establish predictable cash flows and demonstrate their capacity to repay loans.
The design of the New Economy programme will therefore matter as much as its overall investment size. If public investment is accompanied by mechanisms that improve access to finance, banks could become more active participants in the expansion of productive businesses.
Lower Interest Rates Are Not Enough
The difficulty is not solely the cost of borrowing. In September, the Ghana National Chamber of Commerce and Industry said businesses continued to face significant credit constraints despite falling interest rates, arguing that affordability meant little when financing remained inaccessible.
Meeting banks’ lending requirements remains a major obstacle for many SMEs. Businesses without audited accounts, formal financial records or acceptable collateral may struggle to secure credit, even as broader economic conditions improve.
This places responsibility on both government and the financial sector to consider how credit assessment can better reflect the realities of smaller businesses. Transaction histories, verified supply contracts and predictable business receipts could help lenders assess creditworthiness beyond traditional collateral requirements.
The BoG has previously urged financial institutions to make better use of digital transaction data to expand access to affordable SME financing, pointing to the potential of payment records and verifiable future income to help lenders assess businesses that lack conventional security.
Integrating these approaches into the New Economy programme’s financing framework could improve access to credit for viable SMEs, enabling them to supply goods and services, expand operations and participate in projects supported by public investment.
The Financing Question Ahead
The government is expected to present further details of the New Economy programme in the 2027 Budget in November. Those details could clarify how the proposed investments will be financed and implemented across the seven priority sectors.
Ensuring that viable SMEs can access the credit needed to scale up operations will be essential to linking the government’s investment plans with increased domestic production, stronger supply chains and private-sector growth.
Without such measures, the planned US$10 billion investment could generate new commercial opportunities while leaving some local businesses unable to raise the capital needed to participate.
