In Ghana, 120% collateral requirements block access to credit
By the AFREEQUE newsroom, based on MyJoyOnline
Illustrative image · RDNE Stock project · Pexels · Licence PexelsThe Association of Ghana Industries (AGI) denounces collateral requirements reaching 120% of the amount borrowed, which are hindering businesses’ access to credit despite lower rates. Its economic affairs committee chairman, Eric Defor, calls on the government to take this into account in the 2027 budget.
Ghanaian businesses are still struggling to obtain bank loans despite improved liquidity in the financial sector and lower interest rates, said Eric Defor, chairman of the Economic Affairs Committee of the Association of Ghana Industries (AGI), quoted by MyJoyOnline. Some lenders are reportedly demanding collateral worth nearly 120% of the amount borrowed.
Eric Defor said the availability of funds in banks did not guarantee affordable access to credit. He attributed the improvement in banks’ financial position in particular to the repayment of bonds linked to the Domestic Debt Exchange Programme (DDEP), Ghana’s domestic debt exchange programme, while calling on the government to take businesses’ financing difficulties into account in the 2027 budget. He was speaking on 11 November on Joy News’ PM Express programme.
The economist also welcomed government interventions, notably changes to the structure of value added tax (VAT), which he said had helped reduce production costs, as well as the management of key economic indicators by the Bank of Ghana. However, he said the collateral conditions imposed by banks continued to limit financing for business production and expansion.
The call comes as Ghana seeks to improve its borrowing conditions and obtain an investment-grade rating to reduce its financing costs, an approach announced on 9 November. It also comes amid discussions on public investment to be included in the 2027 budget, notably the demands made on 11 November by ISSER, the research institute on the University of Ghana’s economic policies.
