Rising insecurity across the Sahel could undermine 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.
The association 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 faces heightened vulnerabilities along its northern borders, including increased cross-border movements, logistical disruptions and security-related pressures linked to the wider Sahel crisis.
GAB stated that 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, the association 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, GAB 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.
The report stated that 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. Rising non-performing loans would force banks to increase provisioning, tying up capital and reducing profitability.
Higher provisioning requirements 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 this interaction could create a reinforcing cycle where insecurity weakens economic activity, rising defaults push up non-performing loans, and tighter bank lending further suppresses growth.
The Bank of Ghana has introduced regulatory measures aimed at reducing non-performing loans and indicated plans to cap the non-performing loan ratio at 10 percent by December 2026. Lenders exceeding 15 percent will be barred immediately from paying dividends or bonuses, while those between 10 and 15 percent will face similar restrictions if they remain non-compliant for two consecutive years.
The banking sector recorded substantial losses in 2023 due to the DDEP, which restructured approximately 137 billion Ghana cedis of domestic bonds. Regulatory reliefs including reducing the capital conservation buffer from 3 percent to zero percent and spreading DDEP losses equally over a four year period ending in December 2025 have now been fully withdrawn.
As of the end of December 2025, 21 out of 23 licensed banks had met the required capital adequacy thresholds, with the remaining two institutions granted until the end of March 2026 to comply. Banks that remain undercapitalised must implement credible recapitalisation plans, with non-compliance potentially triggering heightened supervisory measures.
Fitch Solutions has also warned that Ghana’s growth outlook for 2026 faces rising downside risks driven by mounting security threats from the Sahel. The research firm pointed to the worsening Islamist insurgency across the Sahel, particularly in Burkina Faso, as a possible source of cross-border attacks into northern Ghana.
While large-scale violence is not expected, Mike Kruiniger, Assistant Director at Fitch Solutions, stated that if militants were to cross into northern Ghana, the government would likely need to ramp up military spending, which is currently among the lowest in Sub-Saharan Africa. This could require significant government resources to strengthen military readiness, forcing fiscal trade-offs between development spending and borrowing.
The International Monetary Fund (IMF) projects real Gross Domestic Product (GDP) growth of about 4.8 percent in 2026, underpinned by firmer exports, easing inflation and a gradual recovery in domestic confidence. However, Fitch Solutions cautioned that Ghana’s economic growth in 2026 faces potential headwinds from fluctuating gold prices and regional security threats.
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.
The Ghana Reference Rate has fallen to 15.68 percent for January 2026 from 29.72 percent at the start of 2025, reflecting improved macroeconomic conditions. Average lending rates have dropped from about 32 percent to between 21 and 22 percent, with Bank of Ghana Governor Dr. Johnson Asiama expressing hope that lending rates could reach 10 percent by the end of 2026.
However, if prolonged, security-related pressure could extend beyond border regions and weigh on system-wide liquidity and balance sheet resilience, potentially reversing recent gains in credit conditions. GAB emphasised that sustainable recovery requires both effective containment of regional security spillovers and continued macroeconomic discipline.
