A former President of the Ghana Association of Banks Naa Dr. Alhassan Andani has assured that viable projects will not suffer despite move by banks to “scale back” on lending.

Dr. Andani disclosed this when he appeared on PM Express Business Edition with host George Wiafe.  

“We should understand that good businesses with viable projects will not be affected by this decision by banks to be more careful with their lending decisions”, he said. 

He added that “if a bank knows that the business has solid internal processes and systems, then that commercial will find the money to support such enterprises”.

The Economy and Non-Performance Loans

The Bank of Ghana’s Economic and Financial Data released in September 2023 showed that Non- Performing Loans have hit a record high over the past five years.

Some of the commercial banks are linking this development to the current economic challenges facing the country which has made it difficult for firms to honor their debt obligations to banks.

 But some industry experts have argued that majority of bad loans can be linked to government’s debt to contractors.

Speaking on the programme, Dr. Andani noted that some of the loan proposals must be scrutinize. 

He believes, this could also help to reduce the Non-Performing Loans.

Future of Banking in Ghana post economic crisis

Commercial Banks in Ghana have been impacted badly as a result of the Domestic Debt Exchange Programme.

This resulted in some of the commercial banks posting record losses in their operations.

However, Dr. Andani disclosed that most of the banks will review their investment decisions as well as know how to place funds with government papers.

This is to ensure that banks minimize their associated shocks that hit commercial banks during the Domestic Debt Exchange Programme.

Dr. Andani is hopeful that banking in Ghana will gradually change for the better influenced by Artificial intelligence.

He added that the move will also shape how credit is extended to businesses and individuals.
Issuance of Corporate Bonds by Businesses  

Dr. Andani also advised companies with good books and financials to explore corporate bonds.

He stated that it could be favorable compared to debt from commercial banks.

“Companies with improved financials, can explore going this way”.

He added this could also help deal with companies with good financials that are still struggling to raise fresh funding to support their operations.

The economy and current challenge

Dr. Andani noted that there has been some pockets of stability, even though the economy is yet to recover.

 “We have witnessed stability in some of the areas like currency. However, a lot more still needs to be done to stabilize the situation”
“Looking at the current state of the economy, we need to take more drastic measures to help restore confidence in the economy”, Dr. Andani added.

Providing some recommendations, he stated that government may have to embark on some cuts in the expenditure, so there can be “more room” to support other important areas.