Financial analyst Dr. Richmond Atuahene has called for immediate government action to address mounting debts owed to Ghana’s banks, warning that delayed repayments risk further destabilizing the already fragile financial sector.
His appeal follows a Fitch Solutions report revealing Ghana’s non-performing loan (NPL) ratio stands at 21.8%, among the highest in Sub-Saharan Africa, alongside a weak Capital Adequacy Ratio (CAR) of 14.0%.
The CAR, which measures a bank’s ability to absorb losses, and the NPL ratio, reflecting unpaid loans, highlight systemic vulnerabilities. Dr. Atuahene attributes the crisis to years of unchecked government contract awards and arrears, particularly in infrastructure and energy. According to IMF and World Bank data, the state owes approximately GH¢35 billion to road contractors and GH¢2.3 billion in energy sector debts, with total liabilities nearing GH¢70 billion. “This debt overhang is suffocating local banks,” he stated, noting that delayed payments convert public sector contracts into bad loans, eroding bank liquidity.
Dr. Atuahene pointed to a 2010 IMF-backed repayment initiative that reduced NPLs from 21% to 11% by 2014 as a model. However, he criticized the government for abandoning fiscal discipline, leading to renewed strain. “Contracts are awarded without considering the impact on banks’ balance sheets,” he lamented. To avert collapse, he urged the government to collaborate with banking leaders and sector ministers to design a structured one-to-two-year repayment schedule. “Timely settlements will lower NPLs, restore solvency, and free up credit for private sector growth,” he argued.
Economists echo these concerns, emphasizing that Ghana’s economic recovery hinges on a functional banking system. Persistent arrears not only threaten deposit security but also stifle lending to businesses, undermining broader growth. While the government has yet to respond, analysts stress that resolving this debt is critical to rebuilding investor confidence and stabilizing the economy.
Ghana’s banking sector has faced turbulence since a 2017–2019 cleanup that saw 420 financial institutions collapse. Though reforms strengthened oversight, public sector defaults now risk reversing gains. Similar challenges have plagued other African nations, such as Nigeria and Kenya, where delayed state payments triggered liquidity crises. For Ghana, a coordinated repayment strategy could provide a blueprint for balancing fiscal pressures with financial stability, ensuring banks remain pillars of economic resilience rather than casualties of mismanagement.
