Ghana’s business environment is experiencing a wave of optimism, driven by increased private sector investments and improved business confidence.
The Bank of Ghana‘s Business Confidence Index climbed from 96.6 in December 2024 to 99.7 in March 2025, indicating growing trust in the economic landscape. However, while firms are gaining confidence, small and medium enterprises (SMEs) continue to face significant financing challenges due to weak credit information systems.
According to a recent analysis by IMANI Africa, one of the critical factors affecting SME financing is the state of Ghana’s credit information infrastructure. The report highlights that Ghana scores 44.44% in credit information and accessibility on the World Bank‘s Business Ready Index, compared to the 46.38% average for lower-middle-income countries. This gap underscores inefficiencies in the country’s credit registry system, making it harder for small businesses to secure financing.
Despite the rebound in private sector credit, which improved from a contraction of -14.7% in February 2024 to an expansion of 3.1% in February 2025, IMANI notes that the high cost of borrowing remains a major obstacle. With an average lending rate of 30.12% as of February 2025, many businesses struggle to afford loans, particularly SMEs that rely heavily on external financing for growth and expansion.
Additionally, while total Non-Performing Loans (NPLs) declined from 24.6% in February 2024 to 22.6% in February 2025, indicating a slight improvement in loan quality, IMANI points out that the numbers still reflect financial stress among businesses. The lack of comprehensive credit data further exacerbates this issue, as lenders adopt cautious lending practices, limiting access to funds for SMEs.
The report also highlights the influx of foreign investments, such as the International Finance Corporation’s (IFC) $450 million commitment to Ghana’s private sector and Global Affairs Canada’s $20 million investment to support women traders. While these investments are expected to boost business growth, IMANI warns that without improvements in credit information systems, many small businesses may continue to struggle with accessing these financing opportunities.
To enhance SME access to credit, IMANI recommends urgent reforms in Ghana’s credit registry operations. Strengthening data collection, improving credit reporting mechanisms, and ensuring real-time accessibility of credit information for financial institutions can significantly improve lending efficiency. By addressing these gaps, Ghana can create a more inclusive financial system where SMEs can thrive, ultimately driving economic growth and job creation.
Source: thehighstreetjournal.com
