The Chief Executive Officer of the Ghana Association of Bankers, John Awuah, says lending to the private sector has increased by more than 30 per cent over the past year, but has challenged the government to use the 2027 Budget to stimulate demand for credit by supporting viable businesses and productive sectors.
He said the banking industry was seeing increased lending activity, with interest rates also easing, although the availability of bankable projects remained a major concern.
Mr Awuah said the challenge facing the economy was not necessarily a shortage of funds in the banking system, but whether enough viable businesses and projects existed to attract financing and generate wider economic activity.
Speaking on the PM Express programme on Joy News on Wednesday, November 11, ahead of the presentation of the 2027 Budget by Finance Minister Dr Cassiel Ato Forson, he cited Bank of Ghana data showing that credit to the private sector had expanded by more than 30 per cent between the previous year and this year.
“I am quite surprised to hear that there is no money in the system,” he said, pointing to the growth in lending as evidence that banks were actively supporting businesses.
He said lending rates had also declined from levels above 20 per cent to about 15 per cent, with some borrowers receiving offers at rates as low as 9.5 per cent.
Those developments, he said, indicated that banks were increasingly prepared to extend credit, although access to financing would also depend on the quality and viability of projects presented to them.
Budget must stimulate productive activity
Mr Awuah said the 2027 Budget should help direct lending towards sectors capable of expanding production, creating jobs and increasing household incomes.
He identified industry and manufacturing as areas that required greater attention, arguing that investment in those sectors could have benefits beyond the businesses receiving loans.
He explained that the expansion of factories and manufacturing operations would create employment, put more income into the hands of workers and stimulate demand for goods and services.
Workers with regular incomes, he said, would have greater capacity to spend at markets such as Kantamanto and other trading centres, helping to improve business activity across the economy.
“If the Budget is directed towards industry and manufacturing, and we get a lot more people on the factory floors, these are all people who will be consuming, who will be going to Kantamanto and the like to purchase,” he said.
He suggested that such an approach could help address concerns among traders about weak customer spending by improving employment and purchasing power.
The bankable projects challenge
However, Mr Awuah said increased lending and lower interest rates would not automatically translate into stronger business investment if there were insufficient projects capable of meeting banks’ financing requirements.
He said the government needed to address the conditions that would encourage businesses to develop viable projects and attract investment.
“Do we have sufficient bankable projects for the banks to lend to? And that is the question, the multi-million-dollar question, that we want the Minister to answer for us tomorrow,” he said.
His comments come as businesses and financial sector stakeholders look to the 2027 Budget for measures to strengthen the link between banking-sector liquidity, private-sector investment and economic growth.
While the expansion in private-sector credit suggests increased lending activity, the ability of businesses to turn available finance into productive investment will remain important.
For Mr Awuah, the task before government is to create the conditions for more investment in industry and manufacturing, so that bank lending translates into jobs, higher incomes and stronger demand across the economy.