BoG Governor urges banks to reassess business strategies amid high interest rates
Governor of the Bank of Ghana, Dr Johnson Asiama
Bank of Ghana Governor Dr. Johnson Asiama, has urged banks to reassess their business strategies in light of persistently high interest rates, noting that the current environment requires a re-evaluation of business models not just to protect profit margins, but to bolster economic growth.
Speaking at the launch of the Bank of Ghana Chair in Finance and Economics at the University of Ghana, Dr. Asiama noted that an era of persistently high interest rates cannot be sustained, and pointed out that this moment presents a unique opportunity for financial institutions to not only safeguard their profit margins but also to play a key role in fostering economic growth.
“Our banking sector must become a catalyst for growth, with more targeted and productive lending to Ghanaian enterprises,” he said.
He further emphasized the critical challenge central banks face in balancing price stability with financial stability, particularly in light of increasing government dependence on domestic financing, pointing out that banks’ holdings of government debt have surged from 20% of credit portfolios in 2010 to over 35% in 2023 across the region, a pattern that Ghana is also experiencing.
According to the BoG Governor, as of June 30, 2025, total gross loans issued by banks amounted to GH¢89.16 billion, while their investments in government and Bank of Ghana securities reached GH¢162.92 billion.
“This trend indicates a concerning preference for risk-free assets, which ultimately crowds out private sector lending and diminishes the effectiveness of monetary policy transmission,” he remarked.
In addition to the challenges posed by interest rates, Governor Asiama highlighted the complexities surrounding exchange rate management. According to the Governor, while many countries claim to float their currencies, in reality, there are fears of depreciation.
“This de facto resistance to floating limits policy flexibility and can fuel credibility gaps,” Dr. Asiama warned.
He urged regional stakeholders to confront this issue head-on, calling for the establishment of exchange rate frameworks that are not only transparent but also adhere to rules and credibility.
“As a region, we must be honest about this divergence and work toward exchange rate frameworks that are transparent, rules-based, and credible,” Dr. Asiama urged.
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