Small businesses in Ghana face interest rates as high as 40%, a September survey by the Chartered Institute of Bankers, Ghana (CIB Ghana) found. This occurs even as Ghana experiences easing inflation and a lower central bank policy rate. Universal banks lend at rates between 10% and 15%, while community banks charge 21% to 25%. Microfinance banks, however, impose significantly higher rates, ranging from 31% to 40%.
This substantial difference in borrowing costs means smaller enterprises face a steeper financial burden. Many small businesses and informal enterprises depend on community-level lenders for essential working capital. High interest rates can erode profits, limit business expansion, and hinder job creation. For instance, 46% of community banks charged 21% to 25% in September, an increase from 36% in July, indicating a growing financial strain on these borrowers.
This credit divide highlights a critical challenge for Ghana's economic narrative. Despite the Bank of Ghana maintaining its policy rate at 14% on September 24, 2026, the benefits of this stability are not reaching all segments of the economy. The survey findings suggest that improvements in broader macroeconomic conditions are not uniformly translating into affordable financing across the financial system. This disparity could slow down overall economic growth, particularly in the vital small and medium-sized enterprise (SME) sector, which is a major employer.
Robert Dzato, Chief Executive Officer of CIB Ghana, presented these findings at the Institute’s third Post-Monetary Policy Committee Policy Seminar. He emphasized the need for credit growth and credit quality to advance together. Dr. Ellen Ohene-Afoakwa, President of the CIB Ghana Governing Council, stressed that monetary policy transmission to the wider economy is critical. She called for a banking sector that provides adequate credit to productive sectors while maintaining responsible lending practices. She also highlighted the importance of preventing bad loans rather than just recovering them.
Bank of Ghana Governor Dr. Johnson P. Asiama, in remarks read on his behalf, explained why lending rates do not always move directly with the policy rate. Banks consider various factors, including funding costs, credit risk, operating expenses, and expected loan losses. He stated that monetary policy transmission is neither automatic nor instantaneous. The September survey also revealed that 65% of banks expressed high confidence in the macroeconomic environment. Additionally, 80% considered the prevailing monetary policy effective in containing inflation. However, 70% of lenders anticipated an increase in inflation over the subsequent three months, showing continued vigilance regarding price pressures.
The survey also examined the banking sector's progress towards reducing non-performing loans (NPLs) to 10% by the end of 2026, a directive from the Bank of Ghana. About 71% of respondents were confident their institutions would meet this target. Mr. Dzato welcomed this confidence but cautioned that stronger lending must be supported by effective credit monitoring and robust risk management. He warned that unpaid loans could create further challenges for the sector. This reflects the delicate balance banks must strike: supporting economic activity through lending while ensuring loan repayment to maintain financial stability. For Ghana's small businesses, the immediate concern remains the high cost of accessing necessary credit, which impedes their ability to invest and grow.