Ghana's private sector credit, when adjusted for inflation, increased by 24.5 percent year-on-year in April 2026. This positive growth reverses a 7.3 percent contraction recorded in May 2025. The total amount of loans, known as nominal credit, reached GHS 115.2 billion, which is a 25 percent rise from the previous year.
This surge in private sector lending happened because interest rates have fallen significantly. Lower interest rates made it less attractive for banks to lend to the government and more appealing to lend to private businesses. The Bank of Ghana (BoG) reduced its main policy rate from 28 percent in mid-2025 to 14 percent by March 2026. Also, the interest paid on shortest-term 91-day Treasury bills dropped from over 15 percent a year ago to 4.9 percent in April 2026.
This shift aligns with Ghana's broader economic strategy to encourage private sector growth and reduce the government's reliance on domestic borrowing. The lower yields on government bonds, which fell from over 20 percent in April 2025 to between 9 and 13 percent across different durations by April 2026, made lending to the private sector more competitive. This trend is vital for job creation and sustainable economic expansion, as outlined in the country's economic recovery programs.
The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, commented on these improvements during the 130th Monetary Policy Committee meetings. He stated that the economy had improved “meaningfully” due to reforms, stronger external financial buffers, and renewed trust from investors. These remarks highlight the central bank's recognition of the positive impact of its monetary policies.
The increase in private sector credit suggests stronger economic activity and confidence among businesses. Lenders will likely continue to shift their focus towards private borrowers as government bond yields remain lower. This move could further boost investment and employment across various sectors. Policymakers will closely monitor whether these lending conditions effectively translate into sustained economic growth.
The services sector received the largest portion of new credit at 36.7 percent of all loans. Commerce and finance followed with 23.0 percent, and manufacturing accounted for 11.0 percent. The private sector’s share of all industry credit increased to 95.8 percent. Public sector credit simultaneously decreased by 27.8 percent to GHS 4.6 billion.
The banking sector's overall financial health also showed improvements. Total assets increased by 26.6 percent year-on-year to GHS 493.9 billion. Total deposits grew by 26.2 percent to GHS 365.5 billion. The non-performing loan (NPL) ratio, which measures bad loans, fell to 18.0 percent in April 2026 from 23.6 percent in April 2025. Excluding the worst category of loans, the NPL ratio was 5.6 percent.
The capital adequacy ratio (CAR), which shows a bank's financial strength, improved to 22.3 percent from 17.5 percent without relying on special regulatory support. This improvement strengthens banks' capacity to withstand potential financial shocks. These positive indicators highlight the increasing stability and resilience of Ghana's financial system.
Despite these improvements, some profitability measures for banks declined. Net interest margins, the difference between interest earned and interest paid, fell from 14.0 percent in April 2025 to 9.3 percent in April 2026. Return on equity (RoE) after tax decreased to 22.4 percent in April 2026 from 31-32 percent throughout 2025. Return on assets (RoA) before tax also eased to 4.3 percent from 5.0 percent.
Banks continued to hold a large portion of their investments in short-term government Treasury bills, accounting for 65.0 percent of their portfolios in February 2026. This is up from 44.5 percent a year earlier. Long-term securities, however, decreased to 34.5 percent from 55.1 percent. This shows continued caution among lenders despite the shift towards private credit.
The cost-to-income ratio, which measures operational efficiency, remained largely unchanged at 74.6 percent in April 2026, compared to 76.2 percent in April 2025. Operating costs did not fall at the same rate as revenues. With total deposits reaching GHS 365.5 billion, banks have enough funds to support further expansion of credit to the economy. This strong funding base provides a solid foundation for continued private sector growth.