On Wednesday, November 11, AGI Chairman Eric Defor criticised banks for insisting on collateral worth about 120 per cent of loan amounts, a hurdle that keeps many Ghanaian firms from accessing credit.
Defor said that, despite improved liquidity in the financial sector and a drop in interest rates, the high collateral bar remains a major obstacle to businesses seeking loans to expand operations. He noted that some lenders still demand security valued at nearly 120 per cent of the borrowed sum, a condition he described as a significant barrier to financing.
Speaking on the PM Express programme on Joy News, Defor acknowledged the government’s recent economic interventions, including changes to the Value Added Tax (VAT) structure that have helped lower production costs. He also praised the Bank of Ghana for keeping key economic indicators under control, though he cautioned that the availability of funds does not automatically translate into affordable loan terms for businesses.
Defor highlighted that banks, buoyed by the repayment of obligations under the Domestic Debt Exchange Programme (DDEP), now have ample money but that accessing these funds remains difficult. He questioned whether the funds available in the banking sector are reaching the businesses that need them to support production.
He called for clearer data on where credit is being directed, expressing concern that some institutions may be channeling available funds into government securities rather than lending to industry. Reliable information would help establish how much money is actually flowing to commercial banks and, ultimately, to businesses.
As Ghana prepares to present its 2027 Budget, Defor urged the government to address these lending conditions and to consider measures that would improve access to finance and support investment in production. The Budget presentation by Finance Minister Dr Cassiel Ato Forson on Thursday, November 12, is expected to outline the government’s plans for sustaining economic stability while improving the financing environment for businesses.
For industry, the challenge is not simply whether banks have money to lend, but whether companies can meet the stringent conditions required to obtain it.
