Lending Toward Services Sector Economically Unsustainable – AGI
The Association of Ghana Industries (AGI) has expressed concern over the growing concentration of bank lending to the commerce and services sectors.
The Association warned that insufficient credit to industry and manufacturing could derail Ghana’s long-term economic transformation agenda.
The concern comes despite a slight reduction in the Ghana Reference Rate, which eased from 10.06% in April to 10.03% in May 2026, according to the Ghana Association of Banks.
While welcoming the marginal decline in the benchmark lending rate, Greater Accra Regional Chairman of the AGI, Tsonam Akpeloo, said the key issue remains the allocation of credit across the productive sectors of the economy.
He observed that a large portion of private sector lending continues to favour trading activities and the services sector, rather than manufacturing and industrial production.
“We observe that a lot more of the credit facilities are not necessarily going to industries. It appears that commerce, buying and selling, and the service sector seem to be taking a chunk of the monies that are going to the private sector,” he said.
According to him, this trend raises concerns for Ghana’s industrialisation drive, especially as government pursues policies aimed at boosting local production, import substitution, and value addition.
Mr. Akpeloo stressed that although the gradual decline in the reference rate could ease borrowing costs over time, industrial players still face major challenges in accessing long-term and affordable financing for expansion and capital investment.
He noted that the manufacturing sector remains central to economic growth, job creation, and the success of initiatives such as the proposed 24-hour economy policy.
“The real sector is really the one that drives economic expansion, economic growth, and job creation,” he emphasised.
Data from the banking sector indicate that credit growth has consistently tilted towards commerce and services, largely due to lower risk exposure, shorter repayment periods, and quicker returns compared to manufacturing, which requires heavy capital investment and longer gestation periods.
However, industry stakeholders warn that continued underfunding of manufacturing could weaken Ghana’s economic transformation agenda and limit the development of strong local production capacity.
Mr. Akpeloo expressed optimism that the declining reference rate will eventually lead to reduced lending rates and improve access to credit for businesses.
“This decline will go a long way to boost the overall interest rates at which we access facilities at the banks and make sure that the interest rates get cheaper over time,” he said.
He further called on banks and financial institutions to introduce targeted financing mechanisms for industrial growth, including special-purpose funding structures and long-term capital support.
According to him, the industrial sector requires patient capital to support factory expansion, machinery acquisition, and the establishment of new production facilities to strengthen domestic manufacturing output.
