Banks grow assets but hold back on business lending in 2024
By Praisebell Rosemond Larbi
Ghana’s banking sector registered a mixed performance in 2024, reflecting both resilience and persistent challenges, according to the World Bank Group’s 9th Economic Update on Ghana, released in June 2025.
The report revealed that while banks recorded strong growth in assets, this was not matched by a proportional expansion of credit to the private sector.
Increased liquidity within the financial system fuelled significant asset accumulation, but high levels of non-performing loans (NPLs) compelled banks to tread cautiously in their lending practices.
“Faced with a high-risk lending environment, banks tended to prioritise liquid assets and low-risk government securities over extending credit to businesses and households. This trend limited access to financing for firms, particularly small and medium-sized enterprises (SMEs), which rely heavily on bank lending for expansion and job creation,” the World Bank noted.
The report observed, however, that Ghana’s financial sector began showing signs of recovery in early 2025.
In the first quarter of the year, private credit rebounded, buoyed by improved macroeconomic conditions and renewed investor confidence. This turnaround is attributed to ongoing fiscal consolidation and the Bank of Ghana’s tight monetary policy, which have contributed to stabilising inflation, strengthening the cedi, and restoring market confidence.
“The rebound in credit suggests that Ghana’s economy is on the right path to recovery,” the World Bank stated.
It further emphasised that this development is an encouraging signal for business growth, employment creation, and long-term economic expansion.
Nonetheless, the World Bank cautioned that sustaining the recovery would require deliberate policy measures.
It urged government to continue implementing reforms aimed at reducing systemic risks in the economy, noting that a stable and predictable business environment would encourage banks to channel more funds into productive sectors rather than locking up resources in government securities.
The report also stressed the importance of strengthening credit risk management frameworks within the banking system.
By addressing vulnerabilities linked to NPLs and diversifying lending portfolios, banks will be better positioned to support the private sector more effectively.
As Ghana consolidates its economic recovery, the World Bank emphasised that the role of the banking sector in providing long-term financing to businesses will be critical.
A sustained increase in private credit, it said, would unlock growth opportunities, drive industrialisation, and accelerate the creation of jobs for the country’s youthful population.
