Ghana’s macroeconomic numbers look increasingly promising, yet millions of business owners still walk out of commercial banks empty-handed or saddled with loans priced far beyond what the official benchmarks suggest they should be.
Average lending rates remain elevated at 19.7% as of February 2026, despite the declining benchmark, with some banks still pricing loans as high as 28% depending on borrower risk profiles. Banking and financial consultant Dr. Richmond Atuahene says this gap is not accidental; it is the product of overlapping structural failures that policy rate cuts alone cannot fix.
The Bad Debt Burden
The most stubborn culprit, according to Dr. Atuahene, is the banking sector’s Non-Performing Loan (NPL) problem. The NPL ratio declined to 18.7% in February 2026 from 22.6% a year earlier, driven by a pickup in bank credit and a contraction in the NPL stock, though the Bank of Ghana (BoG) maintains the level remains elevated and requires sustained policy attention.
Nearly one in every five loans is not being repaid. Dr. Atuahene explains that banks respond by adding a risk premium to all borrowers, meaning credible entrepreneurs effectively subsidise the defaults of others through higher interest charges.
Locked-Up Capital
A second hidden cost lies inside the BoG’s Cash Reserve Requirement (CRR), which currently obliges banks to hold between 15% and 25% of deposits at the central bank. Dr. Atuahene reveals that these reserves earn zero interest for commercial banks, forcing them to charge more on the remaining funds available for lending to protect their margins.
The Operational and Legal Drag
Operating costs compound the problem further. Administrative, technology, and utility expenses account for more than 50% of bank income, leaving little room to absorb rate cuts. Legal recovery adds another layer: Dr. Atuahene notes that courts can take three to seven years to finalise loan recovery judgments, and collateral auctions are routinely stalled by bureaucratic delays, corruption, or legal interference. Every year of uncertainty becomes a risk premium carried by future borrowers.
Ghana’s policy rate has dropped from a high of 30% in 2023 to 14% in March 2026, yet commercial banks are often slow to adjust rates downward, with lending rates still hovering between 18% and 19.7%.
A Way Out
Dr. Atuahene argues for a multi-pronged response. He calls on the BoG to reduce the cash reserve requirement to free up more capital for lending, and urges commercial banks to align their internal base rates more closely with the falling Ghana Reference Rate (GRR). The GRR stood at 10.03% effective May 6, 2026 — a near-10-point gap from actual lending rates that represents billions of cedis in excess costs paid by Ghana’s private sector every year.
The BoG Governor has stated his ambition to see lending rates fall below 10% before the end of his term, and the central bank is targeting a reduction of the NPL ratio to 10% by the end of 2026. Whether structural reforms keep pace with that ambition will determine whether cheaper money finally reaches the entrepreneurs who need it most.
