info@businessghana.com
The Governor of the Bank of Ghana, Dr Johnson Asiama, has called on commercial banks in the country to shift away from over-reliance on government securities and redirect their capital toward productive private sector lending.
Delivering his remarks at the launch of the Bank of Ghana Chair in Finance and Economics at the University of Ghana last Tuesday, Dr Asiama stressed that the country’s ongoing economic recovery depended heavily on the ability of banks to support real sector growth rather than feeding into the state’s appetite for domestic borrowing.
He said that by the end of June 2025, while total bank loans to businesses and households stood at GH¢89.16 billion, investments in government and central bank securities had ballooned to GH¢162.92 billion, a trend he warned was distorting monetary policy and choking opportunities for private enterprise.
The Governor described the imbalance as a major risk to the country's medium-term growth prospects, as it prioritised short-term sovereign returns over long-term economic transformation.
Dr Asiama’s call comes amid wider concerns across Africa about the governments’ increasing dependence on domestic capital markets, which is crowding out private investment and weakening financial sector resilience.
“Across the region, we see a sharp rise in banks’ holdings of government debt, from 20 per cent of credit portfolios in 2010 to over 35 per cent in 2023. Ghana mirrors this trend.
“This reflects a worrying skew towards risk-free assets, which crowds out private sector credit and dulls the potency of monetary policy transmission,” he said.
The Governor also stated that the recent appreciation of the cedi had led to a nearly 50 per cent drop in remittance inflows, as many Ghanaians living abroad had paused sending money for local development projects.
He stated that over the last seven months the local currency had gained significant ground, appreciating by over 40 per cent against the US dollar, 31 per cent against the British pound, and 24 per cent per cent against the Euro, supported by improved macroeconomic stability, falling inflation, and strong external reserves.
Dr Asiama explained that while the cedi’s strength reflected rising investor confidence and economic stability, it was also altering the behaviour of the diaspora.
He said many overseas Ghanaians now perceived sending money home as less beneficial due to the exchange rate, in spite of local inflation falling and the prices of materials such as cement expected to adjust.
A Professor of Finance at the University of the Witwatersrand, South Africa, Prof. Yegandi Imhotep Paul Alagidede, who was the keynote speaker, stated that the Cedi Research Unit at the University of Ghana was set to drive original innovation, positioning Accra as the future capital of quantum finance.
He said the central bank should take steps to become a leader in monetary innovation by issuing the world's first quantum-secured, resource-backed central bank digital currency.
Prof. Alagidede said the bold plan included launching a gold-backed digital cedi and commodity-backed tokens to anchor a Pan-African clearinghouse by 2028.
He explained that a new legislation would mandate resource backing for the currency and introduce citizen bonds, embedding financial sovereignty into Ghana's economic DNA.
“Let us birth the Institute for Metanomic Futures — a world-class sanctuary of knowledge where computer scientists’ study Afa/Ifá divination algorithms, economists decode oral trade lore, and lawyers draft smart contracts in Ga, Nankani and Sesotho.
“From cowries to crypto, Africa’s currency has never been merely a medium of exchange — it has been memory, covenant, and power.
Our cowries once whispered sacred trust across lagoons and forest markets. Our gold dust shimmered in the hands of griots and kings.
Our iron blades sealed marriages, not mortgages,” Prof. Alagidede said in the inaugural lecture for the BoG Finance and Economics Chair on the theme, “From Cowries to crypto: the Long Arc of Monetary Policy in Africa”.
The Vice-Chancellor of UG, Prof. Nana Aba Appiah Amfo, expressed the commitment of the university to provide intellectual freedom, infrastructural support, and collaborative environment necessary for the BoG Chair and its associated research ecosystem to flourish.
“We expect this initiative not only to enrich academic curiosity but to inform national policy, inspire business leadership, and cultivate a vibrant pipeline of finance and economics professionals equipped to meet the challenges and opportunities ahead.
“I would like to extend my sincere gratitude to all individuals who have contributed to the realisation of this vision: the Bank of Ghana, faculty members, administrators, and most importantly, the scholars whose work will influence this Chair for many years to come,” she added.
