AGI raises concern over unsustainable lending bias toward services sector
The Association of Ghana Industries (AGI) has raised concerns over what it describes as the growing concentration of bank lending toward the commerce and services sectors, warning that limited credit to industry and manufacturing could weaken Ghana’s long-term economic transformation agenda.
The concern comes despite a slight reduction in the Ghana Reference Rate (GRR), which dropped from 10.06% in April to 10.03% in May 2026, according to the Ghana Association of Banks.
While welcoming the marginal decline in the benchmark lending rate, the Greater Accra Regional Chairman of AGI, Tsonam Akpeloo, said the key challenge is not just interest rates but how credit is allocated within the economy.
He noted that a significant portion of bank financing continues to be directed toward trading activities and services, rather than productive sectors such as manufacturing and industrial production.
“We observe that a lot more of the credit facilities are not necessarily going to industries. It appears that commerce, buying and selling, and the service sector seem to be taking a chunk of the monies that are going to the private sector,” he said.
According to him, this trend raises concerns at a time when Ghana is prioritising industrialisation, import substitution, and value addition as key pillars of economic growth.
Mr. Akpeloo stressed that although declining benchmark rates could gradually ease borrowing costs, industrial players still face major challenges in accessing long-term, affordable financing needed for expansion and capital investment.
He argued that the manufacturing sector remains central to job creation, economic growth, and the successful implementation of government initiatives such as the proposed 24-hour economy policy.
“The real sector is really the one that drives economic expansion, economic growth, and job creation,” he emphasised.
Data from the banking sector indicate that credit growth has consistently favoured commerce and services, largely due to lower risk levels, shorter repayment periods, and faster returns compared to manufacturing, which typically requires large capital outlays and longer investment horizons.
However, industry stakeholders warn that continued underinvestment in manufacturing could slow Ghana’s structural transformation and weaken domestic production capacity.
Mr. Akpeloo expressed optimism that the continued decline in the Ghana Reference Rate could eventually lead to lower lending rates and improved access to credit for businesses.
“This decline will go a long way to boost the overall interest rates at which we access facilities at the banks and make sure that the interest rates get cheaper over time,” he said.
He also called on financial institutions to establish targeted financing mechanisms to support industrial growth, including specialised funding structures and long-term capital solutions.
According to him, such interventions are necessary to help industries invest in machinery, expand production facilities, and scale up domestic manufacturing to meet national demand.
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