The latest report of the Bank of Ghana on the country’s Collateral Registry for the fourth quarter of 2023 has painted a nuanced picture of Ghana’s lending landscape highlighting dynamics in secured loans across various sectors and institutions.
A significant highlight of the report is the stark decline in the total value of secured loans granted and registered by banks and Specialized Deposit-taking Institutions (SDIs). Compared to the same period in 2022, there has been a remarkable 54.9 percent decrease, with the total value plummeting to GH¢5.9 billion in Q4 2023 from GH¢13.2 billion previously.
Banks, in particular, witnessed a substantial drop in their contribution to secured loans, with a staggering 63 percent decline from GH¢12.3 billion in Q4 2022 to GH¢4.5 billion in Q4 2023. This decline reflects a broader trend of credit slowdown driven by strategic portfolio reallocation amid heightened risk aversion.
Conversely, SDIs experienced an uptick in secured loans, recording a notable 53 percent rise to GH¢1.4 billion in Q4 2023 from GH¢918.7 million in the same period in 2022.
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The report also sheds light on the sectoral distribution of secured loans, with the commerce and finance sector emerging as the top recipient, commanding a significant 43.3 percent share in Q4 of 2023.
This underscores the importance of financial support for businesses operating in these sectors.
Meanwhile, agriculture, forestry, fishing, and several other sectors received lower shares of secured loans, indicating potential areas for increased financial assistance.
Examining the distribution of secured loans by institutions, banks maintained their dominance but saw a decrease in their share, signaling a diversification in lending sources. Savings and loans, rural and community banks, and microfinance companies recorded increases in their respective shares, reflecting a more inclusive lending environment.
Furthermore, the report highlights fluctuations in average lending rates across institutions, suggesting a dynamic lending landscape. Large private enterprises continued to dominate secured loans, although there was a noticeable uptick in shares for individual borrowers and private enterprises such as SMEs and micro-businesses.
Overall, the Collateral Registry report provides valuable insights into the evolving dynamics of secured loans in Ghana, emphasizing the need for adaptive strategies.