The banking sector in Ghana is grappling with an alarming trend of loan defaults, predominantly by medical doctors who migrate abroad after securing personal loans. John Awuah, President of the Ghana Association of Banks, revealed that nearly 70% of medical doctors who obtain loans from local banks ultimately default on their repayment obligations. This development has become a significant concern for financial institutions, especially given the high societal regard for medical professionals.

Speaking on Joy News’ PM Business Edition, Mr. Awuah detailed how these professionals leverage their financial standing. Doctors, often perceived as highly credible and trustworthy, secure personal loans – sometimes substantial amounts like GH¢120,000 or GH¢150,000 – using their bank statements. These funds are then reportedly used to facilitate their travel abroad, where they subsequently take up employment in other jurisdictions. Once settled and gainfully employed overseas, a significant majority of these doctors fail to settle their debts in Ghana, leaving their loans hanging.

Mr. Awuah expressed profound disappointment at this practice, noting that it undermines confidence in a demographic traditionally considered to possess high moral integrity. He questioned the lack of effort from these practitioners to honor their financial obligations, especially when they are earning income abroad. The high default rate contributes to an increase in non-performing loans (NPLs) within the Ghanaian banking system, posing a threat to financial stability.

The Ghana Association of Banks has highlighted the severity of the issue, which has prompted them to explore various corrective measures. At one point, there was a consideration to engage embassies, requesting that visa applicants obtain clearance from banks before their visa processes could proceed. However, this approach would require formal diplomatic engagement.

Currently, the Association has initiated formal processes with the Ministry of Foreign Affairs to address the problem through diplomatic channels. Mr. Awuah confirmed that a letter has been logged at the Ministry of Foreign Affairs, aiming to establish mechanisms to ensure that Ghanaian borrowers who relocate abroad continue to fulfill their financial responsibilities. While this engagement with the diplomatic corps is seen as a reactive mechanism, banks are hopeful that it will lead to sustainable solutions to mitigate the impact of these loan defaults on the nation's banking sector.