Ghana Tops C-NERGY’s Regional Comparison with Highest Rate of Non-Performing Loans

Ghana has emerged with the highest rate of non-performing loans (NPLs) among African countries surveyed in the latest C-NERGY regional comparison, raising fresh concerns about the health of the country’s financial sector.

The report, drawing on central bank data and CEIC figures, shows Ghana’s NPL ratio rising from 20.6% in 2023 to 21.8% in 2024, with projections placing it at 22.6% by the end of 2025. This positions Ghana not only as an outlier in the West African sub-region but also the worst performer among the seven countries reviewed.

“Macroeconomic challenges such as high inflation, currency depreciation, and elevated borrowing costs have weakened borrowers’ ability to repay loans,” the report said, adding that the agriculture, transport, and construction sectors are particularly hard-hit.

While peer economies such as Nigeria and South Africa have managed to stabilize their loan books, improving slightly to 3.9% and 5.2% respectively, Ghana’s situation continues to deteriorate. Kenya, which previously trailed Ghana, saw its NPL ratio rise from 14.8% to 16.5%, while Côte d’Ivoire moved from 7.2% to 8.0%, and Burkina Faso from 7.0% to 7.8%.

Togo remained flat at 7.7%. These marginal shifts suggest localized sector stress, but none as severe or persistent as what Ghana is currently facing.

The regional comparison underscores how far Ghana has drifted from the continental average in terms of credit quality. Ghana’s NPL level is now more than five times that of Nigeria, Africa’s largest economy, and nearly double that of East Africa’s Kenya, which is itself battling credit tightness and weak SME performance.

This trend not only places Ghana at the bottom of the regional table but also casts doubt on the long-term effectiveness of regulatory and governance reforms introduced following the country’s 2017 banking crisis.

That crisis, just eight years ago, offers important context. Before the Bank of Ghana’s financial sector clean-up, the banking industry was riddled with weak risk management, poor governance, and insolvency risks. The result was a collapse in confidence, with NPLs peaking at 22.9% in 2017.

To restore stability, the government said it injected over GHC 21 billion into the sector through a comprehensive overhaul, which included revoking the licenses of insolvent banks, recapitalizing viable ones, and tightening oversight. By December 2019, the NPL ratio had dropped to 14.3%, reflecting a brief period of recovery and confidence restoration.

However, that recovery was cut short. From 2021 onward, Ghana’s economy, like many others, began absorbing the aftershocks of the COVID-19 pandemic. But local vulnerabilities worsened the impact: businesses folded, household incomes eroded, and debt servicing faltered. Banks struggled to deploy capital into viable projects, and bad loans began creeping back into the system.

With the NPL ratio now nearly back to pre-clean-up levels, the specter of systemic financial instability is once again hovering over Ghana.

“If these historically high rates are not acknowledged as systemic and actively addressed, they will continue to undermine efforts to reduce the overall NPL ratio and maintain financial sector stability,” the report warned.

Non-performing loans, which are loans overdue for more than 90 days, don’t just reflect borrower defaults; they also erode bank capital, limit lending capacity, and undermine financial sector confidence. While the Bank of Ghana continues to maintain that the sector is solvent, the steep upward trend in NPLs poses real threats to credit expansion, SME growth, and long-term financial stability.

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