The persistent friction between the appetite for industrial growth and the cautious nature of the banking sector recently took center stage at the Alisa Hotel in Accra, as the Association of Ghana Industries (AGI) and the Bank of Ghana (BoG) attempted to bridge the “distrust gap” that has long plagued the Ghanaian credit market.
In a room filled with the nation’s top manufacturers and central bank regulators, the conversation focused on the Borrowers and Lenders Act, 2020 (Act 1052) – a piece of legislation that, on paper, is designed to revolutionize access to capital but has struggled with the messy realities of implementation.
“The Association of Ghana Industries in collaboration with the Bank of Ghana’s Collateral Registry, has successfully organised a sensitisation workshop on the Borrowers and Lenders Act, 2020. The workshop sought to deepen understanding of the Act, promote responsible lending practices, and strengthen collaboration between industry and regulators”
Association of Ghana Industries
The workshop was a strategic attempt to fix the plumbing of the financial system, observing that for the average Ghanaian manufacturer, securing a loan often feels like a battle against a system that demands the impossible. For the banks, lending to local industry frequently looks like a gamble they aren’t willing to take.
The AGI noted that Act 1052 is supposed to be the referee in this struggle, providing a clear set of rules that protects both the person with the money and the person with the plan. Yet, it is impossible to discuss lending without acknowledging the broader economic landscape that dictates the terms of the deal.
AGI President Pharma Kofi Nsiah-Poku was blunt about this reality, arguing that while better laws are a welcome step, they cannot operate in a vacuum. High inflation and currency volatility act as a natural brake on credit, pushing interest rates to levels that make even the most brilliant business plan look like a liability.
Nsiah-Poku’s point was clear: for Act 1052 to truly work, it needs the support of a stable macroeconomic environment. When the cost of doing business is unpredictable, lenders default to defensive positions – usually high interest rates and excessive collateral demands.
The AGI’s advocacy for stability was meant to remind regulators that the law is only one part of the equation. A stable cedi and controlled inflation are what ultimately turn “access to credit” from a political talking point into an industrial reality.
SMEs and Fair Play
The workshop also highlighted how the struggle for credit is most acute for the Small and Medium-Sized Enterprises (SMEs) that make up the bulk of the AGI’s membership.
Dr. Grace Amey-Obeng, Chairperson of the Women in Business Chapter, spoke for many when she stated that for smaller players, the barriers are often about more than just numbers. There is a systemic lack of “clear rules of engagement” that often leaves SMEs in the dark when their loan applications are rejected.
Dr. Amey-Obeng’s focus on accountability and compliance was a call for a more professionalized relationship between banks and small businesses. On one hand, SMEs must step up their game in terms of financial record-keeping and transparency. On the other, the financial sector must be held to a standard of fairness that prevents arbitrary roadblocks.
The Borrowers and Lenders Act provides the framework for this accountability, but it requires a cultural shift on both sides to become effective. For women-led businesses, who often face even steeper uphill climbs, this regulatory clarity isn’t just helpful – it’s a prerequisite for survival.
The most transformative part of Act 1052 is the Collateral Registry. For decades, the Ghanaian credit market has been obsessed with landed property, so that if you didn’t have a deed to a building or a plot of land, you didn’t have a loan.
Mr. Fred Asiamah Koranteng, Head of the Collateral Registry at the Bank of Ghana, has been tasked with changing this narrative. He acknowledged that while credit is the fuel for growth, the traditional ways of securing it are outdated and exclusionary.
According to him, the goal of the Registry is to allow businesses to leverage movable assets – machinery, inventory, accounts receivable, and even intellectual property. This is a game-changer for a modernizing economy, as manufacturers with a factory full of high-tech equipment will be able to use that equipment to secure a loan to buy raw materials.
The Bank of Ghana’s provision of a central, transparent database where these assets can be registered is giving lenders the security they need to move away from their obsession with real estate.
The Accra workshop highlighted that the success of Act 1052 depends entirely on collaboration. It’s easy to pass a law, but it’s much harder to change how a bank manager thinks or how a business owner manages their books.
The collaboration between the AGI and the Bank of Ghana is a promising sign that the country is finally taking the structural barriers to credit seriously. If the Collateral Registry can successfully displace the monopoly of landed property, Ghana will see a surge of capital flowing into the sectors that actually drive productivity.
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