The Bank of Ghana (BoG) has urged commercial banks to strengthen their risk management systems, governance structures, and business models. Governor Johnson Pandit Asiama warned that recent improvements in financial stability must not lead to complacency among financial institutions. He delivered this message at the 43rd Annual General Meeting of the Ghana Association of Banks in Accra on October 8.
Ghana’s banking sector has recorded notable progress, including stronger capital positions, improved financial stability, and a decline in non-performing loans. However, preserving these gains requires banks to build institutions capable of absorbing economic shocks. They must also respond effectively to rapid technological and market changes. Dr. Asiama stressed the importance of prudent risk management, sound governance, and innovation.
This directive comes as Ghana’s banking industry navigates a delicate balance. Banks are encouraged to increase lending to businesses to support economic recovery. However, a rapid expansion of credit could recreate asset quality problems if underwriting standards and loan monitoring systems do not improve at the same pace. This situation highlights the central bank's focus on sustainable growth.
Private-sector credit expanded by 35.5 percent in August 2026, a significant increase from 13.3 percent a year earlier. In real terms, credit growth reached 29 percent, up sharply from 1.7 percent over the same period in 2025. This acceleration followed a decline in the average lending rate to 15.9 percent in August 2026, down from 24.2 percent a year earlier. Improving credit demand also contributed to this trend.
The Governor stated, “Our ambition should be to build a banking sector that is strong enough to absorb shocks, innovative enough to adapt to change, and capable of financing Ghana’s long-term economic transformation.” This statement underscores the BoG’s vision for a resilient and growth-oriented financial system. The central bank's proactive stance aims to prevent future vulnerabilities.
While increased lending is crucial for businesses, it also heightens the need for banks to assess borrowers carefully. Rapid balance-sheet growth can boost short-term earnings. However, it can also create future losses if loans are approved without adequate analysis of cash flows, sector exposure, and repayment capacity. The BoG's concern is not the increase in lending itself, but rather ensuring that recovery is supported by disciplined credit origination, administration, monitoring, and recovery processes.
The Bank of Ghana is preparing a credit-risk management directive to broaden the framework governing these areas. It is also developing a liquidity coverage ratio directive. This will require banks to hold sufficient high-quality liquid assets. These assets must be enough to withstand a significant 30-day liquidity shock. These measures indicate the regulator's desire for banks to prepare for stress even during favourable economic conditions.
This approach is significant because financial vulnerabilities often accumulate during periods of optimism. Institutions tend to expand credit and underestimate the possibility of renewed macroeconomic volatility during such times. The Governor has also asked banks to address weaknesses identified through the BoG’s macroprudential stress tests. Furthermore, he urged them to strengthen fraud controls, cybersecurity systems, and liquidity management arrangements.
Digitalisation has improved access to financial services and reduced transaction costs. However, it has also expanded the banking system’s exposure to cyberattacks, identity theft, payment fraud, and operational disruption. Effective risk management must therefore extend beyond the traditional focus on loan defaults. Banks must now manage interconnected credit, liquidity, technology, fraud, foreign exchange, and reputational risks comprehensively. The central bank has already directed financial institutions to ensure fraud control units have direct and unrestricted access to managing directors or chief executives. This protects the independence of fraud investigations and prevents serious cases from being blocked or diluted by middle management. For bank boards, Dr. Asiama’s intervention places responsibility for resilience at the highest level of governance. Risk management cannot remain a mere compliance exercise handled solely by internal audit and risk departments. It must influence lending targets, technology expenditure, staff incentives, and the pace at which institutions expand into new products. This warning is particularly relevant as banks rebuild following the effects of Ghana’s domestic debt restructuring and seek new sources of earnings. Stronger capital ratios offer an important cushion, but capital alone cannot compensate for inadequate risk controls.