Average lending rate fell to 31.5% in June 2023, from a high of 35.8% in January 2023.

This is equivalent to an average of 2.625% per month on loans charged by the banks.

According to data from the Bank of Ghana, the average lending rate began easing in April 2023, as it dropped to 31.6%.

This is surprising because inflation remains high at 42.3%.  

In January 2023, average lending rates stood at 35.85%. It went up to 36.64% in February 2023, but fell to 35.87% in March 2023.

It fell again sharply to 31.66% in April 2023 and 30.94% in May 2023, but rose slightly to 31.5% in June 2023.

The dip in landing rates may be due to the fact that the banks are diversifying their assets, following the impact of the Domestic Debt Exchange Programme, with a focus on lending which is their core business.

The Monetary Policy Committee of the Bank of Ghana is set to announce developments in the economy with a key decision on the Policy Rate on July 24, 2023.

Already, some analysts are anticipating a steady policy rate for the next two and half month.

The Central Bank in May 2023 maintained its key interest rate at 29.5% as inflation continues to decline, citing tight monetary policy and stable currency as contributing factors.

Average lending rates vary among banks

The average lending rates, however, vary among the banks and the respective sectors they lend to.

Some banks offer loans equivalent to the Ghana Reference Rate of 26.89% as of June 2023, whilst others will charge rates as high as 38%.

This however depends on the risk profile of the customers.

Some banks also perceive lending to the agriculture and construction sectors as riskier, and therefore credit to these sectors are expensive.