News Guide Africa

Tag: Deloitte Ghana

  • NPL risks cast shadow over Ghana’s economic recovery amid BoG rate cut

    NPL risks cast shadow over Ghana’s economic recovery amid BoG rate cut

    By Adnan Adams Mohammed

    Professional services firm Deloitte and the Bank of Ghana (BoG) have issued a dire warning: while Ghana’s macroeconomic indicators are brightening, a “stubborn mountain” of bad debt remains the primary threat to the stability of the banking sector.

    In its latest commentary on the nation’s financial health, Deloitte highlighted that despite a general improvement in asset quality, the Non-Performing Loan (NPL) ratio stands at a staggering 18.7%. This “toxic asset” load continues to pose a significant risk, even as the Bank of Ghana moves to stimulate the economy through aggressive monetary easing.

    In March 2026, the Bank of Ghana’s Monetary Policy Committee (MPC), chaired by Governor Dr. Johnson Asiama, slashed the monetary policy rate by 150 basis points to 14.0%. The decision followed a period of robust recovery, including a real GDP growth of 6% in 2025 and a dramatic fall in inflation to 3.3% by February 2026.

    However, Deloitte warns that this shift is not without peril. “Although asset quality has improved, the NPL ratio remains a key risk,” the firm stated. They further cautioned that the pass-through effect of higher global crude oil prices and geopolitical tensions could trigger a resurgence in inflationary pressures, potentially undoing recent gains.

    A “dual-speed” recovery

    The BoG’s March 2026 Monetary Policy Report describes a “dual-speed” economy. On one hand, consumer and business confidence have surged to record highs as the Cedi stabilizes. On the other, the structural health of bank balance sheets is under intense pressure from legacy debts.

    “Businesses are beginning to see a path toward expansion again,” Dr. Asiama noted. “But the NPL ratio is the Achilles’ heel. It creates a ‘liquidity squeeze’ that stalls the very recovery businesses are feeling optimistic about.”

    Factors influencing the NPL ratio

    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.

    The great divide: local vs. foreign banks

    New data reveals a widening gap in how financial institutions are weathering the storm. Indigenous (local) banks are bearing the brunt of the crisis, with NPL ratios ranging between 18.5% and 22.0%. In contrast, foreign-owned subsidiaries have maintained much cleaner books, with ratios between 8.0% and 12.5%.

    Experts attribute this disparity to local banks’ high exposure to small and medium enterprises (SMEs) and delayed government payments to contractors. Foreign banks, backed by parent company capital and stricter global credit scoring, have recovered faster from previous shocks like the Domestic Debt Exchange Programme (DDEP).

    Risks on the horizon

    While the external sector remains resilient, with reserves rising to US$14.5 billion, Deloitte pointed to emerging vulnerabilities:

    Capital outflows: As interest rates fall, there is a risk of capital exiting the country in search of higher returns elsewhere.

    Currency volatility: Increased liquidity in the banking sector could put renewed pressure on the Cedi.

    Real returns: Currently, real returns on investment remain positive due to the wide gap between inflation and interest rates, but this window may narrow if global shocks persist.

    Regulatory crackdown

    The Bank of Ghana has signaled it will maintain a “hawkish” eye on credit risk. The regulator is currently pushing banks to adopt more aggressive recovery efforts and stricter frameworks for new loans.

    “We cannot have a sustainable recovery if the banking sector is carrying a heavy load of toxic assets,” a senior BoG official stated.

    As the second quarter of 2026 begins, the “Confidence vs. NPL” tug-of-war remains the defining theme for Ghana’s financial sector. For investors and consumers alike, the message from both Deloitte and the Central Bank is clear: the sky is clearing, but the ground remains muddy.

    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.

    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.

     

     

     

     

  • Economic recovery on course …sustained discipline and resource planning crucial for 2026 growth – experts say

    Economic recovery on course …sustained discipline and resource planning crucial for 2026 growth – experts say

    By Adnan Adams Mohammed

    Ghana’s economy is showing encouraging signs of recovery and resilience, with key indicators pointing in a positive direction under President John Dramani Mahama’s first year in office.

    Yet, financial experts and global consulting firms are issuing a unified message: sustained success in 2026 hinges on rigorous fiscal discipline, effective resource planning, and careful management of lingering external risks.

    Projections estimate a robust 5.7% GDP expansion for 2025, exceeding forecasts by the IMF and World Bank, signaling that the economy is back on a strong footing.

    The Positive Trajectory: Discipline and Strong Indicators

    Prof. Godfred Bokpin, Professor of Finance and Economics at the University of Ghana, commended the President’s first-year performance, stating, “Overall, the President has done quite well. Many of the indicators confirm that the economy is heading in the right direction.”

    Key gains highlighted include:

    Improved Fiscal Discipline: Expenditure cuts and stricter commitment controls by the Finance Ministry have been implemented.

    Debt Reduction: Public debt decreased significantly by 15.65% as of July 2025, with the debt-to-GDP ratio dropping to 44.9% from 61.8% in December 2024.

    Policy Coordination: Strong alignment between fiscal and monetary authorities has helped stabilize the economy.

    External Support: Favourable global commodity prices and IMF disbursements of over $2.6 billion have bolstered national reserves and confidence.

    The positive trend has already led to a credit rating upgrade by Fitch in June 2025 and is generating optimism for potential future upgrades, according to US-based finance professor, Williams Peprah.

    Deloitte’s Warning: Lingering Risks and 2026 Focus

    Despite the positive momentum, global consulting firm Deloitte, in its West Africa in Focus 2025 report, sounded a note of caution. The firm stressed that while fiscal discipline and debt sustainability are the order of the day, ongoing efforts face lingering risks.

    Deloitte emphasized that effective resource planning, mobilization, and enhanced collaboration between the public and private sectors are crucial for establishing a resilient foundation for 2026. They also urged the government to increase capital spending as part of its fiscal consolidation efforts.

    Professor Peprah echoed these concerns, warning that Ghana’s current benefits from high cocoa and gold prices are a double-edged sword. “If these prices reverse, it could negatively affect the economy,” he cautioned, urging policymakers to start planning for such eventualities.

    Rating agencies are likely to maintain Ghana’s current B- rating in the short term while observing further developments, particularly revenue mobilisation and debt repayment capacity, before considering an upgrade.

    Looking Ahead: Growth Fueled by Household Spending

    The economic expansion of 2025, which saw non-oil growth remain firm at 6.8%, was significantly boosted by festive spending in Q4, according to market research firm IC Research.

    Looking into 2026, analysts expect recovering household spending driven by stable prices and a softer VAT regime to continue supporting sales revenue and overall economic momentum.

    The main investment focus appears to be on capital growth rather than immediate income generation capacity.

    The path ahead for Ghana’s economy appears promising, contingent on the government’s ability to sustain the fiscal discipline of its first year, heed expert warnings about external risks, and effectively plan and mobilize resources for long-term recovery.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • 2026 Budget: Hopes kept in suspense as stakeholders skeptical of outcomes

    2026 Budget: Hopes kept in suspense as stakeholders skeptical of outcomes

    Ghana’s 2026 Budget has been welcomed by businesses, but experts are cautioning that it’s just the first step towards real economic reform and job creation.

    Deloitte Ghana’s Country Managing Partner, Daniel Kwadwo Owusu, says the scrapping of the Covid-19 levy and VAT reduction to 20% are positive signs, but Ghana is still far from achieving its economic goals.

    The professional firm raises concern that Ghana lacks reliable youth unemployment data, and existing programs are too small to make a significant impact, although most young Ghanaians work in the informal sector with low pay, no benefits, and no security.

    Juxtaposing that, young entrepreneurs need more than just credit; they need support with export procedures, tax compliance, and market connections.

    Government Initiatives:

    The 24-Hour Economy initiative aims to create 1.7 million jobs by 2028 through industrial parks and manufacturing zones.

    A Member of Parliament Kojo Oppong Nkrumah has admonished the government to prioritize implementation and accountability to turn budget promises into tangible outcomes for Ghana’s youth.

    “If this budget really intends to create growth and jobs, they need to be investing in the job creating initiatives… If your revenue doesn’t perform and you don’t invest it in the things that will create jobs, the young people will come for you at the end of the day.”

    Translating the budget into reality

    At Deloitte’s National Economic Dialogue and Post-Budget Discussions in Accra, Country Managing Partner Daniel Kwadwo Owusu said the budget has been widely welcomed because it reflects what he calls a “responsive” and “listening” approach.

    But he stressed that this early goodwill will only last if the government follows through with bold structural changes, noting that, while the direction of policy is positive, Ghana remains at the very beginning of a longer journey.

    As he put it, “we are nowhere where we want to get to and therefore we are not at the destination at all… (for) every destination, you start at one step.”

    He described the 2026 Budget as that initial step, adding that “this is the good step that the government has taken.” But, he was quick to add that, the real test is whether the budget translates into jobs and productivity at scale.

    Mr. Owusu referenced recent scenes of mass job-seeking such as the crowds at El Wak Stadium (seeking recruitment in the Ghana Armed Forces) as evidence of the urgency. He questioned how Ghana will “create employment for all these masses” and “galvanize all this energy into production.”

    Feedback from Deloitte’s clients, he said, shows cautious approval, especially following the reduction in some taxes.

    He observed that “it appears that the government is listening,” but emphasised that this is only a beginning. What matters now, he argued, is solving “the real problem, real output, delivering employment and delivering what the people are looking for.”

    “Business confidence will hinge on consistency and credibility. People respond and react to what the government does. People want to see trust.”

     

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Increasing fraud within financial institutions: Deloitte Audit Partner charges Board, management to strengthen control measures

    Increasing fraud within financial institutions: Deloitte Audit Partner charges Board, management to strengthen control measures

    The Financial Services Industry leader at Deloitte Ghana, Charlotte Forson-Abbey, has stated that it is not the responsibility of auditors to identify fraud in banks or institutions.

    According to her, it is rather the responsibility of the management and board of the banks or institutions charged with governance to implement measures to detect fraud.

    Mrs. Forson-Abbey disclosed this at a webinar organised by Deloitte on the topic “Banking Sector Fraud: How We See It and What Can Be Done.”

    “Our main responsibility is to ensure that we form an opinion on financial statements and not necessarily specifically to do with fraud. So, the fact that I’m auditing a bank or institution does not mean that I’m going to detect fraud. It could come along as I move on”.

    “And I mean, we see it happening. But it is not the full responsibility of auditors to detect, prevent fraud. So apart from the ISA 200 [International Standard on Auditing 200], there’s also ISA 240, which also states that, look, the primary responsibility of fraud prevention and detection is really management of the financial institutions and those charged with governance”, Mrs Forson-Abbey who is an Audit Partner stressed.

    “So, the board and the boards of committees, including the audit committee and all that, are the ones charged with governance to ensure that fraud is prevented or minimised. It is really their responsibility to ensure that the banks or the financial institutions have processes and systems in place to prevent fraud and to detect fraud”, she added.

    In 2024, banks and other financial institutions dismissed 155 staff for fraud.

    Indeed, the number of staff involved in fraudulent activities in Banks and Specialised Deposit-Taking institutions rose by 33% from 274 in 2023 to 365 in 2024.

    Mrs. Forson-Abbey said forensic auditors can, however, investigate and uncover fraud.

    According to her, the value for money audit, performance audit, among others, require auditors or other specialised investigators to investigate thoroughly to expose fraud.

    “I must say that there are other kinds of audits, like the value for money audit, performance audit, and forensic audits. And all of these require specialised auditors who actually zero in to find out more about fraud. So, I think that perspective is very, very important.”, she mentioned.

    The webinar also featured Eric Cab-Beyuo, Head of Fraud Compliance and Reporting Unit, Bank of Ghana and Patrick Baah Abankwa, Head, Member Experience and Growth, Chartered Institute of Bankers, Ghana.

  • African insurance market still offers immense opportunities – Report

    African Insurance Market

     

    A report by Deloitte Ghana has said that the African insurance market still offers immense opportunities for insurance players, fuelled by the emergence of insurtech and fintech start-ups coupled with strong population growth and low insurance penetration levels.

     

    Although the COVID-19 pandemic may have delayed the anticipated boom in the African insurance market, it has also highlighted the industry’s resilience and potential for growth.

     

    The report indicated that innovative insurance players are addressing low insurance penetration, leveraging technology to offer tailored products and enhancing customer experiences.

     

     

    Players without an insurance license are increasingly moving into the insurance space, competing with existing insurers and providing new ways of servicing and reaching customers, it said.

     

    “Regulators are creating supportive environments that promote innovation and financial inclusion, which could ultimately lead to increased insurance penetration,” the report said.

     

     

     

  • Deloitte’s free consultancy to gov’t on achieving economic sovereignty

    Deloitte’s free consultancy to gov’t on achieving economic sovereignty

    Adnan Adams Mohammed

     

    Deloitte Ghana has recommended to government five key ways to achieve economic sovereignty.

     

    Among others, the accounting and auditing firm listed; increasing the tax net through digitalization, investing borrowed funds wisely to expand the productive capacity of the economy, tackling corruption, domesticating the economy and leveraging on the African Continental Free Trade Agreement.

     

    Deloitte Ghana has said it is committed to sharing insights and best practices that can help Ghana and the broader region navigate these complex issues and achieve the growth objectives.

     

    “By collaborating with industry leaders, policymakers, and other stakeholders, we can build a more resilient, inclusive, and sustainable future for all, the Managing Country Partner, Daniel Kwadwo Owusu noted at the launch of the 2023 Ghana CEO Network. “As a Knowledge Partner, Deloitte is proud to bring our expertise in these areas to the table”.

     

    He said the theme for this year’s event “Sustainable corporate governance, digital industrial transformation, and economic sovereignty”are key to unlocking new opportunities for growth and prosperity.

     

    “Through our partnership with the CEO Network, we look forward to engaging in meaningful dialogue with leaders from the private, public sectors, and civil society”, he added.

     

    He affirmed Deloitte’s commitment to being a responsible and impactful corporate citizen. We are led by our purpose of making an impact that matters.

     

    Also, Group Chief Executive Officer of Margins, Moses Kwesi Baiden Junior, for his part said the topic for this year’s event ‘economic sovereignty’ is important, especially considering the growing interdependence of the world’s economies, cultures and populations fostered by cross-border trade in goods, people, and technology.

     

    “We are currently experiencing some of the adverse effects of that economic interdependence exacerbated by the COVID-19 pandemic and the conflict in Ukraine. Business owners are grappling with the impact of supply shocks and high inflation rates whilst consumers are discouraged by the reduced purchasing power of the Ghana cedi. These are indeed difficult times; but as the quote says, what doesn’t kill us, makes us stronger. In every crisis, there is an opportunity; but to resolve a national crisis, there must be collaboration across sectors – that is what this year’s CEO summit is aiming to do – facilitate collaborative solutions”, he added.

     

    He explained that “as we aspire to attain economic freedom, we must first audit our resources – land, sea, air, and space and reindustrialize our supply chains to reduce our current dependence on foreign supply chains. The truth is the African continent has the manpower and the raw materials required to not only compete globally but to dominate. The problem is, we surrender our sovereignty by exporting our raw materials at low prices for the value to be added outside of Africa”.

     

    He furthered that Ghana has the prerequisites for guaranteeing sovereignty, but need to close its technology gaps to claim it.

     

    “To enable this business environment, the partnership between the public and the private sectors must be strong; with the public sector creating the appropriate macro-economic environment through policy design and implementation and working with the private sector to develop new capabilities and capacities, influence change technology, improve operational efficiency to increase the value of our assets”, he added.

  • Policy Rate Hike: experts differ on effectiveness to control inflation

    Policy Rate Hike: experts differ on effectiveness to control inflation

    Adnan Adams Mohammed

    The Bank of Ghana last week increased the monetary policy rate by a further 3 percentage to 22 percent from 19 percent purposefully to control the frog-leaping consumer inflation.

    Financial experts have expressed verified opinion in their response to a question on whether the policy rate could be an effective measure to tame the galloping inflation which currently is around 31.7%.

    A Finance Lecturer and Associate Professor with Andrews University in Michigan, USA, in reacting to the increase in the Central Bank’s policy rate rate said, the monetary authority should have put a cap on the amount government borrows, so far as it has put a limit on the primary reserves of banks, although he welcomed the policy rate hike.

    “So far as the Central Bank has put a limit or has increased the primary reserves for banks, it must also put a cap on the amount [borrowings] government withdraws from its account which is called debt monetization or printing of money”, Dr Williams Peprah suggested.

    According to him, the printing of money is one of the major impacts on increasing inflation, “so, I was hoping that the Central Bank will address the issue”.

    He however said “the Bank of Ghana’s monetary policy decision of increasing the rate to 22% is a good thing that we need now in the country. Because, we’ve noticed the disparities between the monetary policy rate, inflation rate, and treasury bill rate.”

    “At the moment, the Treasury bill rate is hovering around 27% and the difference between that one and the monetary policy rate is worrisome. So moving it up to 22% is something that will be able to address the issue”.

    On the Central Bank’s decision to boost the supply of foreign exchange into the economy and help stabilise the cedi, Dr. Peprah said the Central Bank should not limit it to only three industries (mining, oil and banking), but also to the other sectors of the economy.

    “The Central Bank should not limit its discussions to only these three industries, but also to the service sector by focusing on telecommunications, because the firms hold some foreign exchange exposure.

    Indeed, the cost of borrowing already will go up as I have mentioned because banks are now pegging their cost of funds to the Treasury bill rate and not the monetary policy rate”.

    Contrary, a Partner at Deloitte Ghana, Yaw Lartey has expressed his worries about the increased policy rate, saying it will not address the rising inflation rate, but rather shoot up cost of borrowing.

    According to him, though the monetary policy rate historically has helped to manage inflation, the current economic situation proves otherwise.

    “So, we know that historically, the monetary policy rate has been used to manage inflation, particularly in an attempt to mop up excess liquidity from the market where necessary. However, in this particular situation, we do not believe that the increase in monetary policy rate will help manage inflation. And this is so because in the last four months, the Ghana Statistical Service has released inflation rate which points out to the fact that imported inflation is the key driver”.

    “So imported inflation has outpaced domestic inflation. When you have imported inflation, it is very difficult to use monetary policy to manage it because a lot of it is driven by factors that are beyond the control of the market forces, particularly within the country”, he added.

    Mr. Lartey advised the government to address the rate of depreciation of the cedi if the country wants to fight inflation.

    “So, what government should focus on is to manage the rate of depreciation if it really want to deal with imported inflation. We should ensure that the cedi is stabilised or strengthened against major trading currencies because a lot of the imported inflation is driven by the fact that they’re importing some commodities; and when the local currency depreciates, we don’t have to spend more to import those commodities”.

    He argued that addressing the cedi’s depreciation will help protect people’s investments, adding that the current rate of return on the money market is less than 28%, lower than the inflation rate of over 31%.

    “And the benefits, we are likely to get is that people’s investments have been protected. So, as we speak we initially projected an inflation rate of 8% inflation. Now we have revised it to 28%. What that means is that any return on investment is less than 28% will be a negative return.”

    “Currently, Treasury bills are trading at about 27%. This year’s inflation is about 31%. And anybody who’s investing at 26% whether any of Ghana’s security is getting a negative return on investment,” he added.

    Mr. Lartey however urged the Bank of Ghana to make more funds available for financial institutions to help mitigate the cost of borrowing, and consequently reduce the cost of doing business.

    Apparently, the Head of Economics Department at the University of Ghana, William Baah-Boateng has commended the Bank of Ghana (BoG) for its swift approach to increase the policy rate by 300 basis points to 22%, after an Emergency Monetary Policy Committee meeting.

    Dr. Baah-Boateng in an interview indicated that had the BoG not intervened, the country’s inflation rate would have been 100%.

    “In economics, there is something we call counterfactual so if the problem is coming and they don’t even step in at all, perhaps we would have been in the 100’s,” he said.

    Currently, year-on-year inflation shot up to 31% in July 2022, latest data from the Ghana Statistical Service (GSS) has revealed.

    However, the cost of borrowing is expected to go up significantly, and consequently, increase cost of living and doing business.