The Bank of Ghana (BoG) is set to implement a new Credit Risk Management Directive. This action comes as private-sector credit experienced a sharp 35.5% growth in August 2026. The central bank aims to reinforce safeguards against potential deterioration in banks' loan portfolios.
This significant increase in private-sector lending represents a substantial rebound from the 13.3% growth recorded during the same period last year. In real terms, credit growth reached 29% in August 2026, a sharp rise from just 1.7% a year earlier. Governor Dr. Johnson Asiama attributed this strong rebound partly to lower lending rates, an easing in banks' credit stance, and a recovery in demand for credit.
This development is crucial for Ghana's economic landscape, as robust private-sector credit often fuels business expansion and job creation. However, unchecked rapid growth can also lead to increased financial instability if not properly managed. The average lending rate declined sharply to 15.9% in August 2026, down from 24.2% a year earlier, making borrowing more attractive for businesses and individuals. This trend aligns with broader efforts to stimulate economic activity and support local enterprises.
Speaking at a meeting with heads of banks, Governor Dr. Asiama emphasized the need for caution. He stated that while private-sector credit expands rapidly, this growth must be supported by sound underwriting standards and effective risk management frameworks. The new directive will cover all aspects of credit management, including origination, administration, monitoring, measurement, and recovery. This comprehensive approach aims to ensure that banks maintain healthy balance sheets.
The upcoming directive will also complement the Non-Performing Loans (NPL) notice issued by the central bank last year. Dr. Asiama noted that despite a significant decline in the banking sector's NPL ratio, it remains elevated compared to regulatory thresholds. This indicates that while progress has been made, further vigilance is required to prevent a resurgence of bad loans. Banks are therefore expected to continue strengthening their credit risk management practices and fully comply with existing NPL guidelines.
The BoG's proactive stance reflects its commitment to maintaining financial sector stability. A healthy banking sector is vital for Ghana's overall economic health, ensuring that businesses can access the capital needed for investment and growth. The directive will help prevent a repeat of past challenges where rapid credit expansion led to increased NPLs and weakened bank balance sheets. This regulatory intervention is a forward-looking measure designed to sustain the positive momentum in lending while mitigating associated risks.
Decision-makers and financial markets will closely monitor the implementation of this new directive. Its effectiveness will be key to balancing economic growth with financial stability. Businesses seeking credit will benefit from continued access to funds, but banks will need to ensure their internal processes are robust. The BoG's actions underscore a cautious yet supportive approach to Ghana's economic development. This will help ensure that the current positive lending trend contributes to sustainable long-term growth.