Ghana's economic progress is now intrinsically linked to a stronger partnership between the banking sector and the private sector, according to Mark Badu Aboagye, Chief Executive of the Ghana National Chamber of Commerce and Industry (GNCCI). Speaking on Joy News’ PM Express Business Edition, Aboagye declared that the era where banks could comfortably rely on government borrowing for profitability is over, emphasizing that lenders must now actively support businesses to drive the nation's economy forward.

For many years, banks enjoyed substantial profits due to high Treasury bill rates, which made the government the most attractive and reliable borrower in the market. This scenario allowed banks to lend capital to the government, secure high-interest returns, and maintain profitability with minimal effort. However, this financial dynamic has undergone a significant transformation.

The fundamentals of the Ghanaian economy have shifted. The government is no longer absorbing bank capital through high-yield Treasury bills, with current T-bill rates now standing at around 10 per cent, a stark contrast to previous rates as high as 25 per cent. This change eliminates the previously lucrative option for banks, compelling them to seek alternative avenues for meaningful returns on their capital.

Mr. Aboagye stressed that with the government’s retreat from heavy borrowing, banks are left with only one viable path: to channel their capital towards the private sector. He underscored that the development of an economy is fundamentally a partnership, and money sitting idle in the financial system benefits no one. Therefore, credit must begin to flow deliberately and consistently to productive enterprises if Ghana hopes to achieve real economic transformation.

Signs of this crucial shift are already emerging, with an observed increase in credit to the private sector. Aboagye expressed confidence that this trend will be sustained, stating, “That is where we’ll be able to move our economy forward.” This sustained flow of credit is seen as essential for fostering business growth, investment, and overall economic development.

Furthermore, lower interest rates are identified as a critical factor in strengthening this new partnership. Affordable credit would encourage more businesses to borrow and invest confidently, thereby stimulating economic activity. This scenario also presents a win-win situation for banks, as reduced interest rates would lead to a decrease in non-performing loans, ultimately enhancing their profitability. “If interest rates should come down, businesses are borrowing, the banks themselves will also do very well,” Aboagye added.

The GNCCI is committed to closely monitoring the situation as banks adapt to this new phase of private-sector-led growth. Mr. Aboagye concluded with a firm reminder that the Chamber expects banks to adhere to their commitments, affirming, “We are holding them to their word. And obviously, we are all here. We will be analysing and assessing.”