- BoG Pushes Banks to Unlock SME, Agriculture Credit as Private-Sector Lending Surges 41.20%
Ghana’s central bank is pressing commercial banks to channel the country’s improving macroeconomic conditions into greater financing for small businesses and agriculture, as private-sector credit rebounds sharply but lenders remain cautious towards some of the economy’s most productive sectors.
Speaking at the Heads of Banks Meeting on Wednesday, August 12, the Bank of Ghana Governor said private-sector credit expanded by 41.20% in June 2026, compared with just 8.60% a year earlier. After adjusting for inflation, credit to the private sector grew by 34.10%, marking a significant reversal from the tight financial conditions that characterised much of the previous two years.
“This is a significant development indeed,” the Governor said, pointing to falling interest rates and easing financial conditions as important drivers of the recovery in lending.
The acceleration in credit represents more than an improvement in banking statistics. It could mark the beginning of a transition from an economy primarily focused on stabilisation towards one in which banks again play a more active role financing investment, production and employment.
Inflation declined to 4.60% in July from 5.30% in June, remaining below the lower boundary of the Bank of Ghana’s medium-term target of 8.00%, plus or minus 2.00 percentage points. The Monetary Policy Committee also maintained the policy rate at 14.00% in July, providing a considerably less restrictive monetary environment than businesses confronted during the height of Ghana’s inflation and currency crisis.
“In the money market, interest rates have continued to moderate across various market segments,” the Governor said. “These developments are beginning to translate into stronger credit flows to the private sector.”
The bigger question now is where that credit is going.
For policymakers, a recovery in lending will have limited transformational impact if banks concentrate disproportionately on the safest corporate borrowers while SMEs, farmers and agribusinesses remain unable to secure affordable financing. These smaller businesses account for a significant portion of economic activity and employment but frequently struggle to demonstrate the collateral, financial records and predictable cash flows demanded by conventional bank lending models.
“Despite the improved economic environment and the growing demand for credit, many SMEs, particularly those on the agricultural value chain, still struggle to access finance, just because banks continue to perceive these businesses as relatively high risk,” the Governor said.
Agriculture illustrates the problem particularly clearly. Farmers face weather risk, commodity-price volatility, seasonal revenues and often fragmented land and collateral arrangements, making traditional monthly repayment structures poorly suited to their businesses.
The central bank’s argument is that lenders themselves must become more sophisticated in understanding those risks rather than simply avoiding the sector.
“As banks, you are not merely financial intermediaries, you are important business partners in the growth and transformation of the economy,” the Governor said.
He urged institutions to develop products structured around agricultural production cycles rather than expecting farmers and agribusinesses to fit conventional lending models. “This should include developing innovative and flexible credit products that recognise the seasonal nature of agricultural activities and align loan repayment schedules with the timing and pattern of borrowers’ cash flows,” he said.
That distinction is important. A cocoa farmer, vegetable producer or agro-processor may have a viable business but cannot necessarily generate equal cash flows every month, meaning a loan designed around predictable salaried income can make an otherwise creditworthy agricultural borrower appear risky.
“Such an approach would enable SMEs to access financing on terms that better reflect the realities of their businesses,” the Governor said.
Banks appear to have considerably more capacity to take those risks than they did a year ago. Total banking-sector assets grew by 30.70% in June 2026, supported largely by deposits and shareholders’ funds, while the industry’s capital adequacy ratio strengthened to 20.40% from 10.60%.
Asset quality also improved substantially. The non-performing loan ratio declined to 16.10% from 23.10% over the same period, suggesting that the banking system is carrying fewer problematic loans relative to its overall credit portfolio.
Together, those indicators create an important policy question. If banks are better capitalised, non-performing loans are declining, inflation is lower and macroeconomic uncertainty has eased, how much longer should productive businesses continue to face the defensive lending behaviour developed during the crisis?
Banks have legitimate reasons to remain cautious. Ghana’s recent sovereign debt restructuring inflicted losses on financial institutions and demonstrated how quickly apparently safe assets can become vulnerable, while SME lending can carry substantially higher information and monitoring costs.
But excessive risk aversion has an economic price of its own.
A bank that protects its balance sheet by avoiding productive businesses may strengthen its individual financial position while weakening the broader economy on which its future profitability ultimately depends. Without credit, companies cannot purchase machinery, expand inventories, employ additional workers or invest in technology, limiting the growth of the customer base banks themselves require.
The economy is providing a stronger backdrop for that transition. Real GDP expanded by 6.40% in the first quarter of 2026, compared with 6.20% during the same period last year, supported by services and industry.
The external sector has also improved. Ghana recorded a trade surplus of US$8.80 billion during the first half of 2026, compared with US$5.80 billion a year earlier, while the current-account surplus widened to US$5.10 billion from US$4.10 billion.
Gross international reserves reached about US$12.90 billion at the end of June, equivalent to five months of import cover, while greater cedi stability has helped limit imported inflation. Together with lower domestic inflation, these improvements reduce some of the macroeconomic uncertainty that previously made long-term lending particularly difficult.
But stability itself does not build factories or finance farms.
That is the underlying message from the Bank of Ghana to commercial lenders. The economy may have successfully moved away from crisis conditions, but the quality of the next phase of growth will depend heavily on whether stronger financial-sector balance sheets are translated into capital for productive enterprises.
Agriculture provides perhaps the clearest test. Ghana continues to import substantial quantities of food despite having significant agricultural potential, yet farmers and processors repeatedly cite finance as one of the principal constraints preventing them from expanding production.
If banks continue to classify entire agricultural value chains as excessively risky, declining inflation and stronger reserves will do little to change that structural weakness. More sophisticated credit assessment, insurance, value-chain financing and repayment schedules aligned with harvest cycles could allow lenders to distinguish genuinely risky borrowers from viable businesses currently excluded by inappropriate financing models.
The same applies to SMEs more broadly. Improving access to credit cannot mean abandoning prudent underwriting, but it does require banks to understand the economics of the businesses they finance rather than relying almost exclusively on collateral.
“The progress that we have made so far provides a solid foundation for sustainable economic growth,” the Governor said. “Your institutions, as banks, you are well-positioned to play a central role in translating these gains into tangible benefits for businesses, for households, and the broader economy.”
That may ultimately become the defining question of Ghana’s credit recovery.
A 41.20% increase in private-sector lending is encouraging, but the more important measure will be whether the credit reaches businesses capable of expanding Ghana’s productive capacity. If banks increasingly finance agriculture, manufacturing, SMEs and export-oriented enterprises, the rebound could help convert macroeconomic stability into jobs and investment.
If lending growth remains concentrated among already well-financed borrowers, however, Ghana may discover that restoring the health of its banking system was only half the task. The next challenge is making that financial strength work for the productive economy.
