Let me ask you a simple question. What do banks actually do? I mean, what is their purpose in an economy? If you ask the bankers in their gleaming high-rises in Accra, they’ll tell you they’re intermediaries, facilitating economic growth, managing risk.
They will use all the fancy jargon they learnt at business school. But here’s what they won’t tell you, what the data shows with brutal clarity: Ghana’s banks are systematically failing the very people who need them most.
A quarter century of banks are turning their backs on the farmers who feed Ghana, on the manufacturers who could build Ghana’s industrial future, on the productive sectors that actually create jobs and wealth.
In 1999, manufacturing businesses received about 25% of total bank lending in Ghana. By 2023, that figure had collapsed to just 11%. Think about that for a moment. We’re talking about a 56% decline. Agriculture fared even worse, plummeting by 65% over the same period.
These aren’t rounding errors or statistical anomalies. This is a systematic withdrawal of capital from the real economy, from the sectors that matter, from the industries that could transform Ghana from a commodity exporter into an industrial power.
Where did all that money go? Did it disappear? Did the banks suddenly stop making profits? Of course not. The money went to services, to commerce and finance, to trading imported goods, and to financial speculation.
The banks made a choice. They chose the quick returns of importing Chinese toothpicks over the patient capital needed to build Ghanaian manufacturing capacity. They chose financial speculation over agricultural transformation.
Agriculture is the second-largest employer in Ghana’s economy. It provides livelihoods for millions of people. It’s supposed to be the foundation for manufacturing growth, providing raw materials that can be processed, adding value, and creating jobs.
Manufacturing, in turn, should be creating the well-paid, stable jobs that lift people out of poverty. This isn’t radical economic theory. This is how every developed economy in history has actually developed. You invest in production. You build things. You create value.
But Ghana’s banks have decided they know better. They’ve decided that productive credit, the kind that supports entrepreneurial innovation, that expands agricultural production, that builds manufacturing capacity, isn’t worth their time.
Instead, they’ve poured money into unproductive credit, into household consumption, into financial games that don’t increase output, don’t create sustainable jobs, don’t build anything real.
And before anyone starts lecturing me about free markets and efficiency, let me tell you what used to work. Before the International Monetary Fund (IMF) arrived with its one-size-fits-all prescriptions in the 1980s and 1990s, the Bank of Ghana actually directed credit where it was needed.
They used credit ceilings to prevent excessive lending to unproductive sectors. They offered lower interest rates for agricultural loans. They imposed mandatory lending ratios to ensure banks invested in agriculture and manufacturing. And it worked. In the early 1980s, agriculture received over 30% of bank credit.
Then came the reforms. The financial liberalisation. The deregulation. The dogma that markets always know best, that government intervention is always bad, and that banks should be free to lend wherever they want. And what happened? Agricultural credit collapsed. By 1993, it was in single digits. The manufacturing sector was hollowed out. The promises of development and prosperity turned to ash.
Now, the defenders of the status quo will say agriculture is risky, and manufacturers can’t provide adequate collateral. They will say banks are just being rational, managing their risk. But that’s exactly my point.
When your banking system considers feeding your own people too risky, when it thinks building your own industries isn’t worth the trouble, when it would rather finance the import of goods that could be made locally, then your banking system isn’t serving the national interest. It’s serving its own narrow profit margins at the expense of the country’s future.
The evidence is overwhelming. Over 25 years, manufacturing averaged just 14.6% of total bank credit. Agriculture received a measly 5.8%. Meanwhile, the services sector got 20.7%, and commerce and finance received 17.3%. But services and commerce don’t employ people at the scale that agriculture and manufacturing do. They don’t create the kind of structural transformation that Ghana desperately needs.
And the consequences? They’re everywhere. Most Ghanaians are reduced to informal petty trading of foreign goods because the productive sectors that could employ them don’t have access to capital. Foreign exchange gets drained importing rice and other food commodities that could be produced locally.
When crises hit, like in 2022-2023, the government has to restrict foreign exchange for food imports, but local production can’t suddenly increase because farmers have been starved of affordable credit for decades.
Meanwhile, while refusing to lend to farmers and manufacturers, Ghana’s banks have been pouring money into something much safer and more lucrative, namely, government securities. They’re lending to the government at high interest rates rather than taking the supposed risk of lending to the real economy.
It’s the ultimate indictment of the system. Banks that claim they exist to facilitate economic development are instead profiting off government debt while the productive economy withers.
The Bank of Ghana hasn’t helped either. In pursuit of inflation targeting, it has consistently raised interest rates to suppress demand. These high rates have made commercial lending even more expensive, further suppressing credit to small and medium enterprises, to farmers, to manufacturers. The focus on monetary stability over productive investment has been catastrophic.
So, what’s the solution? It’s actually quite simple, though it requires admitting that the last forty years of policy have been a failure. Ghana needs to return to directed credit policies. Not completely, not rigidly, but enough to ensure that banks serve the national development agenda, not just their quarterly earnings reports.
The country needs to revitalise its development banks, like the Agricultural Development Bank and the National Investment Bank. It needs to support indigenous participation in the banking system. It needs to distinguish between productive credit that builds the economy and unproductive credit that merely circulates money without creating anything real.
This is what countries like South Korea and Taiwan did when they were developing. They directed credit to strategic sectors. They built industrial capacity. transformed their economies. Ghana had similar policies. They worked. Then they were abandoned in favour of free market ideology, and look where that got us.
For 25 years, investment in the sectors that matter has been declining, banks have chosen quick profits over national development, and Ghana’s farmers, manufacturers, and workers have been betrayed. The data is clear. The failure is undeniable. The question is, how much longer will this continue?