Single Digit Now! GUTA Pushes for Fast-Tracked Lending Rate Cuts After BoG Policy Shift

Introduction

The Ghana Union of Traders’ Associations (GUTA) has renewed its call for urgent action to bring commercial lending rates down to single digits, following the Bank of Ghana’s (BoG) recent monetary policy adjustments. This development has sparked significant discussion about the pace of economic recovery and the accessibility of credit for Ghanaian businesses.

Key Points

Background

The Bank of Ghana’s recent decision to cut the Monetary Policy Rate by 250 basis points in January 2026 has been met with both appreciation and criticism. While the central bank has implemented aggressive rate cuts totaling 900 basis points over the past year, commercial banks have been slow to pass these savings on to borrowers. This disconnect between policy rates and actual lending rates has become a focal point for business advocacy groups like GUTA.

Analysis

The Current Economic Landscape

Ghana’s economic indicators have shown remarkable improvement in recent months. Inflation has dropped from 23.8% in late 2024 to just 5.4% by the end of 2025, while the Cedi has appreciated by over 40% against the US Dollar. International reserves have reached $13.8 billion, providing nearly six months of import cover. These positive trends create a strong foundation for reducing lending rates.

The Lending Rate Gap

Despite the BoG’s aggressive monetary easing, commercial banks continue to maintain lending rates around 20.45%. This significant gap between the policy rate (15.5%) and actual lending rates has frustrated business groups who argue that the economic conditions no longer justify such high borrowing costs. Banks typically cite operational risks and legacy non-performing loans as reasons for maintaining elevated rates, even as the currency remains stable.

Impact on Business Growth

High lending rates act as a substantial barrier to business expansion and job creation. For small and medium-sized enterprises (SMEs), which form the backbone of Ghana’s economy, access to affordable credit is essential for growth and competitiveness. The current lending environment makes it difficult for local businesses to compete with international companies that can access credit at much lower rates, particularly under the African Continental Free Trade Area (AfCFTA) framework.

Practical Advice

For Business Owners

1. **Explore alternative financing options** while waiting for rate reductions, including microfinance institutions and peer-to-peer lending platforms
2. **Strengthen your credit profile** by maintaining good payment records and reducing existing debt
3. **Consider group lending arrangements** which often come with lower rates than individual loans
4. **Negotiate with your bank** using the improved economic indicators as leverage for better terms

For Policymakers

1. **Implement regulatory measures** that incentivize banks to pass on policy rate cuts to consumers
2. **Develop programs** that specifically target SME lending with government guarantees
3. **Enhance financial literacy programs** to help businesses better navigate the lending landscape
4. **Create a more competitive banking environment** to naturally drive down lending rates

FAQ

Conclusion

The push for single-digit lending rates represents a critical juncture in Ghana’s economic development. While the Bank of Ghana has made significant strides in monetary policy easing, the translation of these efforts into tangible benefits for businesses remains incomplete. GUTA’s advocacy highlights the urgent need to bridge the gap between policy intentions and practical outcomes. As Ghana’s macroeconomic indicators continue to improve, the pressure mounts on commercial banks to align their lending practices with the broader economic recovery. The success of this initiative could determine the pace and inclusivity of Ghana’s economic growth in the coming years.