News Guide Africa

Tag: Bank of Ghana (BoG)

  • BoG signals possible lifeline for struggling bank as recapitalization deadline looms

    BoG signals possible lifeline for struggling bank as recapitalization deadline looms

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG) has indicated it is considering a strategic extension of the recapitalization deadline for a single, unnamed commercial bank currently struggling to rebuild its capital to meet the minimum capital requirement following the impacts of the Domestic Debt Exchange Programme and the recent poor quality of risk assets held by the sector.

    The move, seen by industry analysts as an attempt to maintain systemic stability rather than trigger another aggressive round of liquidations, marks a rare moment of flexibility from the central bank since the 2017–2019 financial sector clean-up.

    Following the domestic debt exchange program (DDEP), several indigenous banks saw their capital buffers severely eroded. The BoG subsequently mandated all universal banks to rebuild their capital to a minimum of GH¢400 million.

    While the majority of the 23 active commercial banks in the country have successfully shored up their capital through retained earnings or fresh shareholder injections, one institution remains in the “danger zone.”

    According to sources close to the regulator, this specific bank has shown a “credible and documented plan” to secure the necessary funds but requires a marginal window beyond the original cutoff to finalize the transaction.

    Stability over liquidity

    The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has previously emphasized that the regulator’s priority is to ensure a “resilient and robust” banking sector. By considering an extension, the BoG appears to be opting for a “soft landing” for the struggling entity to avoid the high costs and public panic often associated with bank closures.

    “The objective is not to collapse banks, but to ensure they are healthy enough to support the economy,” a senior official at the BoG noted. “If a bank has a clear path to compliance and the delay is purely administrative or logistical, it makes sense to allow them the time to cross the finish line.”

    Market reaction

    The news has been met with cautious optimism by the Ghana Association of Banks (GAB). Financial experts argue that a single bank failure, even if isolated, could dampen investor confidence just as the sector is beginning to recover from the shocks of the 2023 fiscal crisis.

    “This is a pragmatic move,” said a banking consultant in Accra. “The DDEP hit the local banks the hardest. Giving an institution that is 90% of the way there a few more months to breathe is better for the taxpayer than a full-scale intervention.”

    Governance and transparency

    Despite the potential extension, the BoG has made it clear that any reprieve will come with “stringent conditions.” This likely includes closer regulatory oversight, restrictions on dividend payments, and a freeze on high-risk lending until the capital injection is fully verified.

    The identity of the bank remains confidential to prevent speculative withdrawals of deposits by customers, though rumors in the financial district suggest it is a medium-sized indigenous lender with significant exposure to the public sector.

    As the financial year draws to a close, all eyes will be on the BoG’s final directive. Whether this extension becomes a blueprint for other struggling entities or remains a “one-off” exception will determine the shape of Ghana’s banking landscape heading into 2027.

     

     

     

  • BoG reports surging confidence in banks amidst lingering bad debt risks

    BoG reports surging confidence in banks amidst lingering bad debt risks

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG) has released its latest assessment of the nation’s financial landscape, painting a picture of a “dual-speed” recovery.

    While consumer and business confidence have surged to their highest levels in months, the central bank warns that a stubborn mountain of Non-Performing Loans (NPLs) remains the “Achilles’ heel” of the banking industry.

    The findings, detailed in the March 2026 Monetary Policy Report, suggest that while the “mood” of the economy is brightening, the structural health of bank balance sheets is still under significant pressure.

    The confidence boost

    According to the BoG, consumer confidence and business sentiments have seen a marked improvement. This optimism is driven by a relative stabilization of the Cedi and a consistent decline in headline inflation, which has improved the purchasing power of households and lowered the cost of raw materials for manufacturers.

    “Businesses are beginning to see a path toward expansion again,” the Governor noted. “The uncertainty that characterized the last two years is fading, replaced by a cautious but clear appetite for new investment and consumer spending.”

    The NPL shadow

    However, this optimism is being checked by the reality of “bad debt.” The NPL ratio—the percentage of bank loans that are in default or close to it—remains elevated, posing what the BoG describes as a “key risk” to the industry’s stability.

    High NPLs restrict a bank’s ability to lend anew to productive sectors of the economy. When a significant portion of a bank’s capital is tied up in non-performing assets, it creates a “liquidity squeeze” that can stall the very economic recovery that businesses are currently feeling optimistic about.

    The drivers of these NPLs include legacy debt which are unresolved arrears from previous economic shocks; high borrowing costs because, despite the drop in inflation, the real cost of credit remains high for many SMEs; and sector-specific stress because certain industries, particularly construction and agriculture, are still struggling with long payment cycles.

    Local vs foreign-owned banks

    Based on the latest industry data and the Bank of Ghana’s 2026 Financial Stability reports, there is a distinct divergence in how indigenous (local) banks and foreign-owned (subsidiary) banks are managing asset quality.

    While the overall industry Non-Performing Loan (NPL) ratio has shown signs of stabilization, indigenous banks generally carry a heavier burden of legacy debt and public sector exposure.

    Comparative Analysis: NPL Ratios (Q1 2026)

    Feature Indigenous (Local) Banks Foreign-Owned (Subsidiaries)

    Average NPL Ratio 18.5% – 22.0% 8.0% – 12.5%

    Primary Risk Drivers High exposure to local SMEs and delayed government payments to contractors. Stricter global credit scoring and focus on multi-national corporations (MNCs).

    Capital Adequacy More vulnerable to Domestic Debt Exchange (DDEP) shocks; slower recovery. Backed by parent company capital; faster post-DDEP recovery.

    Recovery Strategy Heavy reliance on collateral foreclosure and debt restructuring. Aggressive write-offs and early-stage credit monitoring.

    Sector Concentration Construction, Agriculture, and Retail. Extractives (Mining/Oil), Manufacturing, and Telecommunications.

    Regulatory oversight and “clean-up”

    The Bank of Ghana has signaled that it will not relax its oversight. To manage the NPL risk, the regulator is encouraging banks to be more aggressive in their loan recovery efforts and to employ stricter credit risk management frameworks for new disbursements.

    “We cannot have a sustainable recovery if the banking sector is carrying a heavy load of toxic assets,” a senior BoG official stated. “Banks must ensure that as confidence returns, they are lending to viable, creditworthy entities to prevent a new cycle of defaults.”

    The outlook for 2026

    As the second quarter of the year approaches, the “Confidence vs. NPL” tug-of-war will define the strength of Ghana’s financial sector. If banks can successfully bring down their NPL ratios while capitalizing on the rising business sentiment, the economy could see a significant boost in credit-led growth.

    For now, the central bank’s message to the market is one of “watchful optimism.” The sky is clearing, but the ground remains muddy.

     

     

     

     

     

     

  • Cut or Hold: BoG MPC faces biggest test on policy rate decision as economists vary in opinion

    Cut or Hold: BoG MPC faces biggest test on policy rate decision as economists vary in opinion

    By Adnan Adams Mohammed

    The Bank of Ghana’s Monetary Policy Committee (MPC) will be holding its 129th regular meeting this week with a difficult riddle to solve. Should it reward the economy with a rate cut after hitting a stellar inflation target, or hold firm against a gathering storm of global “war shocks”?

    New data reveals that Ghana’s year-on-year inflation plummeted to 3.3% in February 2026, a drastic fall from the 23.1% recorded just a year ago. This puts inflation not only within but significantly below the central bank’s medium-term target band of 8+- 2%.

    PwC’s “Support Growth” Stance

    Professional services firm PwC argues that the data strongly supports a reduction in the Monetary Policy Rate (MPR) when the committee meets on March 18. According to PwC, the current stability provides a “strong justification” to ease borrowing costs and stimulate credit to the private sector.

    PwC highlights four pillars for a rate cut:

    Anchored Inflation: At 3.3%, headline inflation is firmly under control.

    External Stability: Imported inflation has dropped to 0.6%, suggesting the cedi is holding its own.

    Broad-based Easing: Both food and non-food categories are showing sustained stability.

    Policy Maturity: The firm argues that previous tightening measures have already done their job.

    “The data strongly supports a measured reduction… to stimulate credit, ease borrowing costs, and reinforce the macroeconomic recovery,” PwC stated in its commentary.

    The Case for a Hold

    However, prominent economist Professor Peter Quartey is urging the BoG to exercise extreme caution. Despite the positive local data, he warns that the escalating US-Israel-Iran conflict could trigger a “supply-side shock” that would make a rate cut premature.

    Prof. Quartey, former Director of ISSER, believes the Bank should maintain the rate at its current 15.50%.

    “I think they will be minded by what is happening in the Gulf,” Prof. Quartey remarked. “It is better they maintain their rates now and look at what happens in the immediate future.”

    Global vs. Local: The MPC’s Dilemma

    The MPC must now weigh two conflicting realities:

    PwC also identified emerging risks that could pause a rate cut. These include disruptions to regional trade in the Sahel due to terrorist activity, which could spike food prices, and the risk of the Middle East conflict pushing energy costs back into the double digits.

    Furthermore, with the National Petroleum Authority (NPA) already hiking fuel price floors for the second half of March, the “disinflationary trend” the country has enjoyed could be under threat as early as next week.

    As Governor Dr. Johnson Asiama and the committee prepare to sit from March 16 to 18, the business community remains divided. Will the BoG prioritize the immediate relief of a rate cut, or will the fear of a global oil-led inflation rebound keep the status quo in place?

     

     

     

     

  • Ghana’s banking sector remains solid as inflation plummets to record 3.3%

    Ghana’s banking sector remains solid as inflation plummets to record 3.3%

    By Adnan Adams Mohammed

    A comprehensive stress test by the Bank of Ghana (BoG) has confirmed that the nation’s banking sector remains “robust” and resilient against adverse macroeconomic shocks, even as the country celebrates a historic drop in inflation to 3.3%.

    The dual announcement, made by the central bank last week week, paints a picture of an economy in the midst of a significant “reset,” characterized by a surging currency and a banking industry bolstered by strong capital buffers.

    In a report released on March 4, the BoG revealed that its January 2026 stress test showed banks are well-positioned to handle economic volatility. This strength is attributed to three primary factors:

    Strong Capital Buffers: Ongoing recapitalization efforts have improved the industry’s solvency.

    Large Government Holdings: Banks have strategically shifted portfolios toward government instruments.

    Improving Macro Environment: A more stable economic backdrop is supporting asset growth and deposit flows.

    Despite the positive outlook, the central bank issued a cautionary note regarding “core liquidity” and the quality of assets. While Non-Performing Loans (NPLs) have moderated, they remain an “upside risk” that requires close monitoring. The BoG expects the industry outlook to remain stable, provided banks meet the recapitalization deadline set for the end of March 2026.

    The “price” of 3.3% inflation

    The banking sector’s resilience is mirrored by a dramatic cooling of the economy. Governor Dr. Johnson Asiama disclosed that inflation fell to 3.3% in February 2026 a sharp contrast to the 23.1% recorded in February 2025.

    Dr. Asiama attributed this success to “prudent management,” specifically the sharp 40% appreciation of the cedi and aggressive “sterilization” measures to mop up excess money from the system. However, the Governor was candid about the financial toll these successes took on the central bank’s balance sheet in previous years.

    “This was delivered at a cost,” Dr. Asiama explained. “The losses recorded in 2024 and 2025 must be interpreted within the proper economic context. We must ask: what has been the real benefit to the economy? We have achieved historically low inflation and a stable currency.”

    2026: A year of recovery

    Looking ahead, the Governor expressed high confidence that the era of central bank losses is over. With inflation hitting record lows, the cost of “sterilization” (monetary policy interventions) is expected to drop significantly. Furthermore, the associated costs of the Gold for Reserves programme have been slashed by half, with the government set to absorb remaining pressures from “Goldbod.”

    “In 2026, the cedi won’t drop by that much again, hence the losses will not be repeated,” Dr. Asiama maintained.

    As the banking sector prepares for its final recapitalization push this month, the combination of a stable currency and record-low inflation suggests that Ghana’s financial foundations are firmer than they have been in years.

    Key Economic Indicators: February 2026

    Indicator Current Rate Change from Feb 2025

    Inflation 3.3% Down from 23.1%

    Cedi Value +40% Appreciation Record performance

    Capital Adequacy (CAR) Improved Trending Upward

    Industry Outlook Stable Contingent on recapitalization

     

     

     

     

     

  • Inflation hits historic low as BoG credits “prudent management”

    Inflation hits historic low as BoG credits “prudent management”

    By Adnan Adams Mohammed

    In a milestone for Ghana’s macroeconomic recovery, year-on-year inflation plummeted to 3.3% in February 2026, marking the lowest rate since the Consumer Price Index (CPI) rebasing in 2021.

    The latest data from the Ghana Statistical Service (GSS) reveals a staggering 19.8 percentage point drop from the 23.1% recorded exactly one year ago. This 14th consecutive monthly decline signals a sustained easing of price pressures that has significantly bolstered the Bank of Ghana’s (BoG) recent policy stance.

    The disinflation trend was largely driven by a cooling food market and the stability of imported goods.

    Food Inflation: Dropped to 2.4% from 3.9% in January.

    Imported Items: Saw a sharp easing to 0.6%, credited largely to the cedi’s strong performance.

    Regional Variance: The Savannah Region recorded the country’s lowest rate at -2.6%, while the North East Region hit a high of 8.9%.

    “A price worth paying”

    Reacting to the figures, Bank of Ghana Governor Dr. Johnson Asiama attributed the record lows to “prudent management,” specifically pointing to the sharp appreciation of the cedi and aggressive monetary sterilization measures.

    Addressing recent concerns regarding the central bank’s financial losses and the costs of the Gold for Reserve (G4R) programme, Dr. Asiama was candid about the trade-offs involved in resetting the economy.

    “This was delivered at a cost,” the Governor noted in an explanatory note. “But what is the real benefit to the economy? We have achieved historically low inflation and a cedi that has appreciated by more than 40%—the best performance in our history.”

    Outlook: A leaner, stronger 2026

    Dr. Asiama expressed confidence that the heavy fiscal lifting is over. He projected that as inflation settles at the lower end of the BoG’s 8 ± 2% medium-term target, the costs of maintaining these levels will “drop sharply.”

    Key pillars for the BoG’s 2026 outlook include:

    Reduced Sterilization Costs: With inflation at 3.3%, the policy rate is expected to decline, lowering the cost of mopping up excess liquidity.

    Gold for Reserve Reforms: Fees and charges for the G4R program have already been halved.

    Cedi Stability: The BoG expects the currency to remain stable throughout the year, preventing a repeat of previous valuation-led losses.

    While some analysts warn that the aggressive policy interventions came at a high institutional cost to the central bank, the GSS data suggests that for the average Ghanaian consumer, the “reset” is finally yielding tangible relief at the marketplace.

    At a glance: Ghana’s inflation journey

    Period Inflation Rate Milestone

    February 2025 23.1% Post-Crisis Peak

    January 2026 3.8% Targeting the Lower Bound

    February 2026 3.3% Lowest since 2021 Rebasing

     

     

     

     

  • Iran-US/Israel War: Ghana authorities allay fear of hard-hit spillovers

    Iran-US/Israel War: Ghana authorities allay fear of hard-hit spillovers

    By Adnan Adams Mohammed

    The recent escalation in the Middle East specifically the joint US-Israeli airstrikes on Iran on February 28, 2026 and Iran’s subsequent retaliatory strikes has created significant ripples across the globe.

    For Ghana and the wider African continent, the impact is not just a distant news story; it is a direct threat to economic stability and human security.

    Despite the global chaos, Ghanaian authorities are attempting to project a sense of calm.

    The Bank of Ghana has assured the public that Ghana’s “macroeconomic buffers” (foreign reserves and fiscal adjustments) are stronger than in previous years and can act as a cushion against these external shocks.

    With regards to Consular Support, emergency hotlines have been activated for Ghanaians in the Middle East to register for potential evacuation.

    Analyzing other impact on Ghana and the region, there could be immediate future threats and risks which need policymakers and governments attention for proactive decisions.

    Economic Impact: The “Oil Shock” and Inflation

    Africa is highly sensitive to fluctuations in the Middle East because of its reliance on global energy markets and shipping lanes.

    Fuel Prices: The Strait of Hormuz, a chokepoint for 20% of the world’s oil, is now a “no-go” zone. For Ghana, which is a net importer of refined petroleum, this means a “landing cost” surge. Expect higher prices at the pumps, which traditionally leads to increased transport fares and utility costs.

    Inflationary Pressure: Ghana had recently seen gains in taming inflation. However, experts like Prof. William Brafu-Insaidoo have warned that these gains are now under threat. When fuel goes up, food prices follow (due to haulage costs), potentially triggering a new cost-of-living crisis.

    The “Double-Edged Sword” for Producers: While oil-producing nations like Nigeria, Angola, and Libya might see a temporary boost in export revenue due to high crude prices, this is often offset by the high cost of importing refined petrol and the global economic slowdown that reduces overall demand.

    Human Security and the Diaspora

    The conflict has put thousands of African migrants and students in the line of fire.

    Evacuation Crisis: On March 1, 2026, Ghana, Kenya, Nigeria, and Uganda began scrambling to evacuate citizens from the region. Ghana has already begun withdrawing non-essential staff from its embassy in Tehran.

    Travel Advisories: The Ghanaian Ministry of Foreign Affairs has issued an urgent “avoid non-essential travel” warning. With airspace closures in the Middle East, many Ghanaians working in the Gulf States (Qatar, UAE, Bahrain) are at risk of being stranded.

    Geopolitical and Security Risks

    The war is causing a realignment of priorities that could leave Africa vulnerable.

    Security Vacuum: As the US and its allies pivot their military resources and “strategic focus” toward the Middle East (Operation “Epic Fury”), there is a fear of a security vacuum in West Africa and the Sahel. This could embolden jihadist groups to expand their territory while international attention is elsewhere.

    Diplomatic Pressure: African nations, through the African Union (AU), are under pressure to take sides. AU Chairperson Mahmoud Ali Youssouf has called for “restraint,” but the conflict is deepening geopolitical fractures on the continent between those aligned with Western interests and those sympathetic to the “Global South” or Iranian-aligned blocs.

     

     

     

     

  • Ghana announces sweeping reforms to generate 127 tons of artisanal gold annually

    Ghana announces sweeping reforms to generate 127 tons of artisanal gold annually

    By Toma Imirhe

    Ghana intends to channel about 127 metric tons of gold annually from artisanal and small-scale mining (ASM) into official trade under revised sector reforms to boost foreign-exchange earnings and stem smuggling losses, Dr Cassiel Ato Forson, the finance minister, revealed last week.

     Ghana has been grappling with major gold leakage from ASM, losing billions of United States dollars in revenue each year as undeclared gold is smuggled through porous borders into global hubs such as Dubai.

    Ghana, Africa’s top gold producer, forfeited about US$11.4-billion over the period 2019–2023, according to non-profit foundation Swissaid. is sophie rain a virgin

    Dr Cassiel Ato Forson told Parliament that the Ghana Gold Board (GoldBod) would be required to buy a minimum of 2.45 tons of ASM gold weekly and consolidate purchases into a formal pipeline targeting more than US$20 billion of annual inflows.

    This push towards increased domestic purchases follows a surge in ASM output, driven by the ongoing surge in gold prices and Ghana’s creation of the GoldBod in 2025, which, by stemming erstwhile production and sales leakages in the informal sector, helped to lift national production to about 186 tons last year.

    The new target dovetails into the Ghana Accelerated National Reserves Accumulation Policy, GANRAP, which aims to increase Ghana’s gross international reserves from the current 5.7 months of import cover to 15 months by the end of 2028, primarily through increases in domestic purchases by the State from both both ASM and large scale gold miners. This forms part of a broader strategy to reinforce macroeconomic stability, strengthen the cedi, and cushion the economy against external shocks,

    Dr Forson further said that from March, under the new ASM policy, GoldBod will take full responsibility for negotiating off-take agreements and selling all ASM gold it procures. The regulator will raise financing to hold three to four weeks’ worth of gold purchases and deploy derivative and hedging tools to manage price risk.

    The Bank of Ghana currently funds ASM gold purchases, a situation which has caused political controversy.

    “To dis-incentivize smuggling, GoldBod may employ price incentives through spot world market price purchases and bonuses for licensed miners,” Dr Forson said.

    The Bank of Ghana and GoldBod will also sign a deal requiring all foreign exchange from the programme to be sold only to the central bank at an agreed rate.

    The minister said formalization efforts will be extended to environmental and enforcement efforts, traceability systems, expansion of local refining capacity and reforms to lower operating costs.

    Ghana is also pushing ahead with reforms to the mining sector’s financial regime, but which large-scale producers say will discourage new investment and slow output

     

     

     

  • The Golden gamble: Why Ghana’s new ‘Gold Board’ must find its own shine to survive

    The Golden gamble: Why Ghana’s new ‘Gold Board’ must find its own shine to survive

    By Adnan Adams Mohammed

    On the surface, Ghana is currently in the midst of a historic “Gold Reset.” With global bullion prices testing the US$4,000 per ounce mark in early 2026 and the newly established Ghana Gold Board (GoldBod) promising to formalize the artisanal sector, the nation’s economic future looks, quite literally, gilded.

    However, beneath the high-gloss policy announcements lies a structural anxiety. According to Prof. William Kwasi Peprah, Associate Professor of Finance at Andrews University, the greatest threat to this ambitious initiative isn’t a lack of gold it is a precarious financing model that risks repeating the mistakes of the past.

    The “cocoa ghost” haunting gold

    The primary fear among economists is that GoldBod could mirror the financial struggles of COCOBOD, which currently grapples with debts exceeding GH₵32 billion. Prof. Peprah warns that without a robust, independent funding structure, GoldBod could become a fiscal burden rather than a boon.

    “The gold board idea is very good,” Peprah noted during a recent session on Joy News’ PM Express. “But the financing model needs to be looked at carefully so that it doesn’t tead to the next Cocoa Board.”

    The concern is rooted in a shift in central bank policy. The Bank of Ghana (BoG), which has been instrumental in the Domestic Gold Purchase Programme (DGPP), is reportedly preparing to exit the direct financing of gold trade. This leaves GoldBod reliant on:

    Government Appropriations: Which, according to Peprah, saw significant shortfalls in 2025.

    Advance Payments: A provision in the GoldBod Act (Act 1140) that allows the board to take money from international buyers upfront—a model that requires high levels of global trust and transparency.

    The need for a “safety net”

    Currently, Ghana is enjoying a “windfall” driven by global fear, currency hedging against a devaluing US dollar, and inflation. But Prof. Peprah insists that high prices are never permanent. He is leading the call for a Gold Commodity Stabilisation Fund, separate from the board’s current US$279 million revolving fund.

    “Now that we are having this windfall, we should be able to establish a stabilisation fund purposely for gold… to guard against the shocks that will come,” Peprah argued.

    This would function similarly to the Ghana Stabilisation Fund (GSF) used for petroleum, providing a buffer when prices inevitably dip. Without it, a sudden market correction could leave Ghana’s trade balance and the livelihoods of thousands of small-scale miners in a “struggling position.”

    A structural tug-of-war

    The GoldBod reform is the boldest move in decades to reclaim value from the artisanal and small-scale mining (ASM) sector, which accounts for over 30% of Ghana’s output. However, the board currently wears three hats:

    1. The Regulator: Licensing all gold activities.

    2. The Commercial Entity: The sole authorized buyer and exporter of ASM gold.

    3. The Investigator: Possessing police-level powers to stop smuggling.

    Critics and scholars like Peprah point out that this consolidation of power is expensive to maintain and operationally complex. For GoldBod to succeed where others have faltered, it must move beyond “rent-collecting” and prove it can manage its own liquidity without being “whipped” by the same debt cycles that have plagued the cocoa sector.

    Feature COCOBOD (Current) GoldBod (Proposed)

    Primary Funding Syndicated International Loans Domestic Bonds / Advance Off-taker Payments

    Stability Mechanism Price Stabilization Fund Proposed Gold Stabilisation Fund

    Regulatory Role Oversight of Cocoa Value Chain Sole Authority for Assay & Export

    Key Risk High Debt / Interest Costs Market Volatility / Funding Gaps

    The verdict

    Ghana’s “Gold Reset” is a high-stakes bet on resource sovereignty. While the policy framework is solid and the law transformative, the “operationalization” specifically how the board pays for the three tonnes of gold it aims to buy weekly remains the billion-dollar question.

    As Prof. Peprah puts it: “If we fail on gold, our trade balance will move into a very struggling position.” The message to the government is clear: save the windfall now, or pay the price later.

     

     

     

     

  • Bank of Ghana alerts on cedi weakness from dividend payouts; manufacturers wary of price cuts

    Bank of Ghana alerts on cedi weakness from dividend payouts; manufacturers wary of price cuts

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG) has signaled potential “downside risks” to the Ghana cedi in the coming weeks, warning that significant dividend payments scheduled for February and March 2026 could trigger a surge in foreign exchange demand.

    The warning, contained in the Central Bank’s January 2026 Monetary Policy Report, follows a year of historic gains for the cedi. In 2025, the local currency performed a dramatic U-turn, appreciating by 40.67% against the US Dollar, 30.89% against the Pound, and 23.97% against the Euro. This marked a complete reversal from the 2024 slump, where the cedi depreciated by nearly 20% against the dollar.

    The dividend pressure cooker

    As multinational companies and large corporations prepare to repatriate profits to foreign shareholders, the demand for dollars typically spikes. The BoG notes that while the cedi remained relatively stable in early 2026, these looming seasonal outflows combined with demand from the energy, commerce, and manufacturing sectors pose a threat to its recent resilience.

    Other risks identified by the Bank include gold price volatility in the form of a potential drop in global gold prices if geopolitical tensions ease; and strengthening global conditions as a stronger US dollar could pull investors away from emerging market currencies.

    Despite these hurdles, the BoG remains optimistic about the near term. Stability is expected to be bolstered by a strong reserve buildup (reaching US$13.8 billion at end-2025), IMF loan tranches, and the proposed 2026 Government Infrastructure Bonds.

    Industry pushback: Why prices aren’t dropping

    While the cedi’s 2025 performance was a boon for the macroeconomy, consumers have yet to see a significant drop in the cost of goods. The Association of Ghana Industries (AGI) explains that the recovery process for manufacturers is far from over.

    Speaking on Joy News’ PM Express Business Edition, AGI President Dr. Kofi Nsiah-Poku cautioned that manufacturers are still recouping heavy losses sustained during the currency’s collapse in 2024.

    “At the time the dollar was very high, I was making losses. Now that the dollar price is low, I have to recover those losses,” Dr. Nsiah-Poku stated.

    He highlighted three critical reasons for the price “stickiness”:

    Credit Economy Risks: Goods are often sold on credit with 3-4 month payment cycles. Manufacturers fear that if they lower prices now and the cedi depreciates by the time they are paid, they will be unable to restock.

    High Utility Costs: Electricity and water tariffs remain high, offsetting the savings gained from a stronger currency.

    Sustainability Doubts: Industry players remain unconvinced that the current economic robustness is permanent.

    Economic Indicators at a Glance

    Indicator- 2024 Performance  -2025 Performance

    Cedi vs USD -19.18% Depreciation -40.67% Appreciation

    Gross Int. Reserves -US$9.1B    -US$13.8B

     

    Inflation (April)    -~23%     –      ~12% (Projected)

    Real GDP Growth  – 5.8%     –     6.1% (Q1-Q3)

    Dr. Nsiah-Poku urged the government to align utility tariffs with the stronger cedi to help lower production costs. Until then, he says, manufacturers will remain “very careful” about price reductions to protect their businesses from future volatility.

     

     

     

     

  • BoG warns banks to adapt as falling interest rates threaten profitability

    BoG warns banks to adapt as falling interest rates threaten profitability

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG) has issued a wake-up call to commercial banks, warning that their heavy reliance on government securities and interest income could undermine profitability as the country enters a cycle of lower interest rates.

    The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, delivered the warning following the latest benchmark interest cut announced at the 128th Monetary Policy Committee (MPC) meeting in January. He noted that while macroeconomic stability has been restored, the banking sector must now undergo structural adjustments to survive a low-yield environment.

    For years, Ghanaian banks have sustained high earnings by investing heavily in sovereign instruments (Treasury bills and bonds). However, with inflation plummeting from 23.8% in December 2024 to a historic low of 3.8% in January 2026, the central bank has aggressively cut its policy rate to 15.5%.

    This shift has triggered a sharp decline in money market yields. The 91-day Treasury bill, for instance, recently dropped to 8.61%, down from over 11% at the start of the year.

    “There is nothing inherently problematic about net interest income,” Dr. Asiama told bank CEOs. “However, a high dependence on it increases sensitivity to interest rate cycles and sovereign exposure dynamics.”

    A BoG thematic review revealed that approximately 68% of industry profitability is currently driven by net interest income, while actual loans to the private sector account for less than one-fifth of total industry assets.

    Call for diversification

    To mitigate the risk of shrinking margins, the Governor urged banks to pivot toward: fee-based income by strengthening transactional banking, trade services, and digital payments; private sector lending by expanding credit to productive sectors like agriculture, manufacturing, and SMEs; and treasury operations, diversifying revenue streams through more sophisticated treasury management rather than passive sovereign investment.

    Dr. Asiama emphasized that “stability must now translate into purposeful intermediation,” adding that the BoG will now embed business model analysis into its supervisory framework to catch vulnerabilities early.

    Modernizing the financial perimeter

    The Governor also touched on legislative reforms intended to modernize the sector. These include the Bank of Ghana Amendment Act 2025, which bolsters the central bank’s independence, and the Virtual Asset Service Providers Act, which brings digital assets under formal oversight.

    “We are not creating a parallel financial system. All we are doing is extending the perimeter of the existing one,” Dr. Asiama explained, noting that banks will soon play a key role in settling transactions for regulated virtual asset providers.

    Outlook for the sector

    Despite the warning, the Governor remained optimistic about the broader economy, citing a 6.1% GDP expansion in 2025 and strengthening foreign reserves. However, he maintained that the “next phase” of the sector’s development would be defined by how quickly banks can move away from being “sovereign-driven” to becoming true engines of private-sector growth.

    The central bank also inaugurated a steering committee to encourage more banks to list on the Ghana Stock Exchange (GSE), a move intended to broaden ownership and improve corporate governance across the industry.