Ghana’s borrowing environment is showing signs of significant improvement as lending rates across the banking sector continue to decline, giving businesses and households greater room to access credit.
Bank of Ghana Governor Dr Johnson Pandit Asiama said the average lending rate for the banking sector dropped from 24.2% in August 2025 to 15.9% in August 2026.
The sharp decline represents a major reduction in the cost of borrowing within a year, reflecting the broader improvement in Ghana’s macroeconomic and monetary conditions.
According to Dr Asiama, the decline in lending rates is increasingly being transmitted through the banking system, creating better conditions for economic participants that depend on credit to finance operations, investment and household needs.
“Borrowing costs continued to ease, with the average lending rate for the banking sector declining from 24.2% in August 2025 to 15.9% in August 2026. Lower lending rates improve the environment for businesses and households seeking credit, while also reflecting the continued transmission of improved macroeconomic and monetary conditions through the banking system.”
Dr Johnson Pandit Asiama
The Governor shared the observation on his Facebook page following the Bank of Ghana’s 132nd Monetary Policy Committee press conference in Accra.
Lower borrowing costs could support private sector activity
The reduction in lending rates comes at a time when private sector credit growth has begun to rebound, potentially strengthening the connection between improving financial conditions and economic activity.
Lower borrowing costs can reduce the financial burden facing companies seeking funding for expansion, working capital and investment. Households can also benefit when credit becomes more affordable, particularly in areas such as housing and other major purchases.
The latest lending rate movement therefore adds another dimension to the improving financial conditions reported by the central bank.
Dr Asiama indicated that the banking sector remains solvent, profitable and liquid, while asset quality has also improved.
These developments are important because the ability of banks to provide credit depends not only on the cost of funds but also on their financial strength and capacity to absorb risks.
Bank assets surge to GH¢500.2 billion
The latest banking sector figures point to continued expansion in the size of Ghana’s financial system.
In August 2026, total assets of the banking sector increased by 20.5% year-on-year to GH¢500.2 billion.
The expansion was supported by robust deposit mobilisation and growth in other funding sources, highlighting the continued ability of banks to attract funds within the financial system.
At the same time, the Capital Adequacy Ratio of the banking system improved to 19.1% in August 2026, up from 18.3% in August 2025.
The stronger capital position provides banks with additional capacity to absorb potential losses while supporting their lending activities.
The improvement also comes against the backdrop of stronger credit growth, suggesting that banks are increasingly able to expand lending while maintaining stronger capital buffers.
Non-performing loans record significant improvement
Another notable development is the decline in the banking sector’s Non-Performing Loan ratio.
The NPL ratio fell to 15.7% in August 2026 from 20.8% over the same period in 2025.
The reduction points to an improvement in asset quality after a period in which elevated non-performing loans placed pressure on banks’ balance sheets.
The central bank attributed the improvement partly to the strong rebound in credit growth.
However, despite the progress, Dr Asiama cautioned that risks remain within the banking sector, particularly regarding credit quality.
“Despite the improvement in the industry’s asset quality, credit risk remained elevated. Banks are, therefore, expected to adhere to the NPL guidelines to bolster confidence in the financial system,” he said during the 132nd MPC press conference.
Credit risk remains a concern despite stronger banks
The warning underscores the balance banks must maintain as lending conditions improve.
While lower interest rates can encourage more borrowing and support economic activity, rapid credit expansion can also expose financial institutions to greater risks if loans are not properly assessed and managed.
The Bank of Ghana’s latest position therefore combines optimism over falling borrowing costs with continued caution around credit risk.
The banking sector’s improved capital position, stronger assets and declining NPL ratio provide important signs of resilience. Yet, the central bank expects financial institutions to maintain prudent lending standards as private sector credit growth rebounds.
Businesses watch borrowing costs closely
The decline in average lending rates from 24.2% to 15.9% is particularly significant for businesses that rely on bank financing.
A lower cost of credit can affect investment decisions, working capital management and the ability of firms to undertake expansion.
Small and medium-sized businesses, which often depend heavily on bank financing, could also find improved lending conditions relevant to their growth plans.
The broader impact will depend on how effectively falling policy and market conditions translate into actual credit access across different segments of the economy.
Ghana’s banking sector is therefore entering a period where stronger balance sheets, improving asset quality and lower borrowing costs are developing alongside renewed private sector credit growth.
The challenge will be ensuring that this improvement continues without allowing credit risks to build up again.
With lending rates now significantly below their August 2025 level, the banking sector’s latest figures offer a picture of changing credit conditions, stronger capital buffers and improving asset quality, while the Bank of Ghana continues to keep a close watch on emerging risks.
READ ALSO: Ghana Plans New Grains Silos Ahead of 2027
