Ghanaian banks tighten credit to small businesses

Commercial banks in Ghana have tightened credit to small and medium scale businesses, including households and instead are opting for mortgages, according to the Economy Times newspaper.

The publication said the decreasing margins on average loans or credit lines are on the other hand reported to be the main contributing factors for the easing of the credit stance to large businesses.

It indicated that even though, large enterprises benefitted from a marginal ease in banks’ credit stance, commercial banks’ credit to the private sector and public institutions over the 12-month period to May 2010 increased slightly at 3.2% to GH¢214.4m, and it is the lowest since May 2003.

The newspaper said the outstanding bank credit to the private sector in May 2010 was GH¢5,873m representing 22.7% of GDP. Of this amount it said, the services sector’s share was 23.4%, manufacturing, 13.9%, commerce and finance, 13.9% and construction 9.9%.

In real terms, it said, commercial banks’ credit to the private sector fell by 3.4% at the end of May 2010 compared with a growth of 19.1% at the end on May 2009.

By Emmanuel K. Dogbevi

1 Comment
  1. Samuel says

    This is crazy. We are a third world for God sak we need to increase credit to the small business and households so that new businesses can be born. The economy of great nations have been sustained by small businesses. Why can’t we learn from the big guys and not repeat their mistakes.

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