Local Banks Gain Ground as Foreign-Owned Banks Lose Dominance in Ghana’s Loan Market

In an interesting development in Ghana‘s loan market, domestically-owned banks are significantly rising to overtake foreign-owned banks in the amount of loans disbursed.

The latest Bank of Ghana’s Collateral Registry Quarterly Brief for the fourth quarter of 2024 reveals that the share of secured loan disbursement by foreign-owned banks saw a significant drop on a year-on-year basis.

On the other hand, locally-owned banks rather saw a significant rise in the same period.

The report reveals that the share of secured loans granted by foreign-owned banks declined sharply from 74.6% in Q4 2023 to 51.5% in Q4 2024.

Meanwhile, domestically-owned banks saw their share surge almost doubling from 25.4% to 48.5% within the same period.

Although the foreign-owned banks still continue to take a bigger share of the loans disbursed, it has rather seen a decrease in share while locally-owned banks are on the increase.

“Foreign-owned banks accounted for the higher share of the total value of secured loans granted by banks in the review period,” the report cited by The High Street Journal indicated.

It continued that, “the percentage share of the value of secured loans granted by foreign-owned banks in Ghana decreased to 51.5 percent in Q4:2024 from 74.6 percent in Q4:2023. The share of the value of secured loans granted by domestically-owned banks increased to 48.5 percent in Q4:2024 from 25.4 percent in Q4:2023.”

Source: Bank of Ghana

Should this trend continue to the point where local banks take a larger share of loan disbursements, Ghana’s financial system will become less dependent on foreign-owned banks. This could help in reducing the impact of external shocks on the country’s financial system.

This development could also signify a possible fierce competition staged by the locally-owned banks. Such a competition could help drive innovation, better customer service, and potentially lower interest rates, benefiting borrowers.

But the bigger question still remains. What factors are driving this major shift in the loan market?

Are the foreign-owned banks limiting the disbursement of their loans or are locally-owned banks becoming more competitive, offering attractive lending terms, personalized services, and tailored financial solutions that better suit the needs of local businesses and individuals? Are individuals and businesses becoming confident in the local banks?

The trend, if sustained, analysts say could empower local financial institutions, enhance credit accessibility, and position Ghana for greater economic resilience.

Source:thehighstreetjournal.com