Ghana’s banking sector is showing renewed signs of caution as lending to the private sector slows, even in the face of growing demand for credit.
The credit conditions remained subdued in February 2026, reflecting a conservative risk posture among banks and a sustained preference for investments in government securities such as Treasury bills.
The data paints a picture of a financial system that is gradually stabilising but still hesitant to fully re-engage with the real economy. Total net credit flows declined to GH¢14.571 billion as of February 2026, compared with GH¢18.881 billion recorded during the same period in 2025. This sharp drop highlights the broader tightening of lending conditions across the economy.
Decline in Public Sector Credit
One of the most striking developments in the report is the significant contraction in credit to the public sector. Public sector borrowing from banks fell by GH¢1.762 billion, representing a 27.8 percent decline. This is a stark contrast to the GH¢357.58 million growth recorded a year earlier.
The central bank attributes this downturn to ongoing fiscal consolidation efforts by the government. As Ghana works to stabilise its macroeconomic environment and reduce debt vulnerabilities, the government has scaled back its reliance on domestic borrowing.
While this is a positive signal for fiscal discipline, it has also contributed to the overall slowdown in credit expansion within the banking sector.
Private Sector Lending Slows Despite Growth
Although the private sector continues to receive the bulk of bank lending, the pace of growth has moderated significantly. Credit to the private sector increased by GH¢16.334 billion between February 2025 and February 2026, representing an 18.7 percent growth rate. However, this is lower than the 26.9 percent growth recorded during the previous year, when credit expanded by GH¢18.523 billion.
In nominal terms, private sector credit rose to GH¢103.667 billion, up from GH¢87.333 billion a year earlier. This indicates that while banks are still lending to businesses, they are doing so more cautiously. The private sector’s share of total outstanding credit has increased to 95.8 percent, up from 93.7 percent, underscoring its continued importance within the credit ecosystem.
Despite this dominance, businesses across various industries are likely to feel the impact of tighter credit conditions, particularly small and medium-sized enterprises that depend heavily on bank financing for operations and expansion.
Banks’ Preference for Safer Assets
A key factor driving the slowdown in lending is the growing preference among banks for safer investment options. Treasury bills and other government-backed securities continue to offer attractive, low-risk returns, making them more appealing compared to lending to businesses, which often carries higher default risks.
This shift in asset allocation reflects lingering concerns within the banking sector following recent economic challenges, including high inflation, currency volatility, and loan quality issues. By prioritising government securities, banks are seeking to protect their balance sheets and maintain stability, even if it comes at the expense of broader economic growth.
Sectoral Distribution of Credit
The report also provides insight into how credit is being distributed across different sectors of the economy. The services sector emerged as the largest recipient of private sector credit, attracting GH¢9.164 billion in February 2026. This marks a significant increase compared to the GH¢5.305 billion recorded during the same period last year.
Similarly, the mining and quarrying sector experienced a sharp rise in credit inflows, receiving GH¢2.965 billion, more than double the GH¢451.11 million recorded a year earlier. This growth reflects increased activity and investment in extractive industries, which remain a key pillar of Ghana’s economy.
In contrast, the transport, storage, and communication sector faced a notable decline in credit flows. This suggests that certain sectors are being deprioritised by banks, possibly due to perceived risks or lower returns on investment.
Implications for Economic Growth
The retreat from aggressive private sector lending raises concerns about the broader implications for economic growth. Access to credit is a critical driver of business expansion, job creation, and innovation.
When banks become more risk-averse, it can constrain the ability of firms to invest, scale operations, and contribute to economic development.
While the current cautious stance may be justified given prevailing economic uncertainties, a prolonged period of restricted lending could slow down recovery efforts. Policymakers and financial institutions may need to strike a balance between maintaining financial stability and supporting productive sectors of the economy.
The trajectory of credit growth in Ghana will depend on several factors, including macroeconomic stability, inflation trends, and the overall health of the banking sector. Efforts to strengthen risk management frameworks and improve loan recovery rates could help restore confidence among banks and encourage more lending to the real economy.
As Ghana continues its economic recovery journey, the role of banks in supporting private sector growth will be critical in shaping the pace and sustainability of that recovery.
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