Private Sector Credit Rebounds Sharply as Real Lending Turns Positive
By Praisebell Rosemond Larbi
Ghana’s private-sector credit landscape is showing its strongest recovery in more than a year, with new Bank of Ghana data confirming that real lending has moved decisively into positive territory after months of contraction. The turnaround marks a notable shift in the credit cycle and signals growing confidence among both banks and borrowers as macroeconomic conditions stabilise in the final quarter of 2025.
For much of the past year, credit growth has struggled under the weight of high inflation, elevated interest rates, and conservative lending behaviour across the banking sector. Between October 2024 and mid-2025, nominal credit growth steadily weakened while real private-sector credit repeatedly sank into negative territory, eroded by inflation and muted business appetite. The low point came in July 2025, when real credit contracted by –7.3%, reflecting one of the most challenging lending environments in recent years.
Banks were cautious, businesses were hesitant, and the tightening liquidity across the financial system created an environment in which borrowing felt riskier and more expensive.
However, the narrative shifted significantly beginning in late August. Real private-sector credit growth began climbing out of negative space, improving from –3.7% in August to 1.7% in September, accelerating further to 5.2% in October, and reaching 5.4% by November 2025. Nominal credit growth mirrored the trend, rising from single-digit lows earlier in the year to record firm double-digit expansion by the end of October.
This rebound is directly linked to the broader macroeconomic improvements emerging across the economy. Inflation has eased sharply, boosting real purchasing power and reducing the rate at which the value of outstanding loans erodes. At the same time, interest rates have been declining, creating a more favourable borrowing environment and lowering financing costs for households and businesses.
Banks themselves are slowly gaining comfort as loan quality improves. Non-performing loans have been trending downward, and capital buffers remain above regulatory thresholds, conditions that give banks more room to expand lending without significantly increasing their risk exposure.
The resurgence in real credit also aligns with early signs of renewed economic optimism. Sectors such as manufacturing, trade, construction, and services are reporting gradual increases in activity, supported by a more stable exchange rate and improving inflation expectations. Many firms appear to be returning to the market for working capital, operational support, and new investment financing.
While liquidity constraints still exist in parts of the banking system, the recovery in credit suggests that monetary easing through the second half of 2025 is beginning to transmit more effectively. If disinflation persists and policy rates remain supportive, analysts believe the final quarter of 2025 could mark the start of a more robust and sustained credit cycle heading into 2026.
For policymakers, the turnaround is particularly significant. A stronger flow of credit to the private sector is essential to sustaining Ghana’s growth momentum, boosting job creation, and supporting the recovery of small and medium-sized enterprises that form the backbone of the economy.
