Ghana’s lending environment is showing signs of easing, but borrowing costs remain elevated, presenting a mixed outlook for businesses and households seeking credit.
Latest data from the Bank of Ghana indicates that the average lending rate declined to 19.7% in February 2026, a significant drop from 30.12% recorded in the same period last year.
Despite this sharp year-on-year improvement, analysts say the pace of decline has fallen short of expectations, particularly given the rapid easing in other key interest rate benchmarks.
Rates decline, but remain high
The trajectory of lending rates over the past year reflects a gradual but uneven decline.
From 29.18% in March 2025, the average lending rate fell to 27.40% in April and further to 26.90% in May. However, the downward trend briefly reversed in June 2025, when rates edged up slightly to 27.0%.
From July onward, the easing resumed, with lending rates declining steadily to 26.59% before dropping sharply to 20.45% by December 2025.
The latest figure of 19.7% in February 2026 suggests that while borrowing costs are moderating, they remain firmly in double-digit territory.
This persistence of relatively high lending rates has raised concerns among market watchers, especially as treasury bill rates have fallen to single-digit levels—typically a precursor to lower commercial lending rates.
Reference rate signals stronger easing
Further evidence of improving monetary conditions is seen in the sharp decline of the Ghana Reference Rate, which dropped to 14.58% in February 2026 from 29.96% a year earlier.
The reference rate, which serves as a benchmark for pricing loans, has fallen in tandem with the central bank’s monetary easing stance.
In January 2026, the Bank of Ghana reduced its policy rate to 15.50% from 18%, citing improved macroeconomic conditions, fiscal consolidation and a strong build-up in foreign reserves.
These developments have created expectations that lending rates should fall more rapidly.
However, the transmission of lower policy and reference rates to commercial lending has been slower than anticipated.
Wide disparities across banks
One of the defining features of Ghana’s credit market remains the wide variation in lending rates across banks and sectors.
While some financial institutions offer loans close to the Ghana Reference Rate, others charge as much as 28%, depending largely on the perceived risk profile of borrowers.
This disparity reflects differences in cost structures, risk appetite and sectoral exposure among banks.
For high-risk sectors or borrowers with weaker credit histories, access to affordable financing remains constrained, even as headline rates decline.
Implications for businesses
For businesses, particularly small and medium-sized enterprises (SMEs), the gradual decline in lending rates offers cautious optimism but limited immediate relief.
Lower borrowing costs are expected to improve access to credit over time, enabling firms to expand operations, invest in new equipment and increase production. However, at nearly 20%, lending rates remain high by global standards, continuing to pose a significant barrier to investment.
Many businesses may therefore remain hesitant to take on new debt, especially in sectors with thin profit margins or high operational risks.
The slow pace of rate transmission also means that the benefits of improved macroeconomic conditions—such as lower inflation and stronger currency stability—are not yet fully reflected in financing costs.
Impact on individual borrowers
For households, the easing trend could gradually translate into more affordable loans for mortgages, personal financing and consumer credit.
However, similar to businesses, individuals are still confronted with relatively high borrowing costs.
At current levels, loan repayments remain substantial, limiting the ability of many households to access credit or refinance existing debt.
The variation in lending rates also means that only borrowers with strong credit profiles are likely to benefit from the lower end of the rate spectrum, while others continue to face significantly higher charges.
Outlook for credit market
The outlook for lending rates will largely depend on the pace of monetary policy transmission and continued macroeconomic stability.
With inflation declining, treasury yields falling and the policy rate trending downward, conditions are in place for further easing in lending rates.
However, banks’ risk assessments, operational costs and legacy non-performing loans could slow the process.
For now, Ghana’s credit market reflects a transitional phase—where macroeconomic improvements are beginning to filter through, but not yet fully translating into affordable credit for the broader economy.
As such, both businesses and individual borrowers may need to wait longer before the full benefits of lower interest rates are realised.
By ELVIS DARKO, Accra
