At a roundtable hosted by the Chartered Institute of Bankers Ghana, the Ghana Association of Banks (GAB) president, John Awuah, warned that simply directing banks to increase SME lending will not solve the problem unless the broader business environment is made safer for borrowers. He cited agriculture as a key example, noting that farmers often struggle to repay loans when they lack proper storage or market access, leading to produce spoilage and defaults.
Awuah highlighted the dysfunction of existing mechanisms such as the commodity exchange and warehouse receipt systems, arguing that they do not adequately support agricultural financing. He cautioned that a falling non‑performing loan (NPL) ratio could be misleading if the overall loan book is expanding faster than the stock of bad loans, and urged banks and policymakers to scrutinise actual credit performance rather than rely on headline ratios.
He called for a stronger credit architecture that would allow banks to better differentiate borrowers by credit history and risk profile, and for improved credit information to enable more informed lending decisions. “If we lose the fight on lending to the SME, we’ve lost the economic fight,” Awuah said, stressing that SMEs represent a significant share of Ghana’s businesses and that sustainable financing is essential for economic activity.
GAB’s remarks come amid broader efforts to reduce the banking sector’s NPL ratio while expanding credit to the economy. The association’s stance underscores the need for systemic reforms before banks can confidently extend more capital to SMEs.
