Low TB Rates: Ghana's true test for banks

In a defining shift for Ghana’s economy, the sharp decline in Treasury bill (T-bill) rates under the policy direction of the Bank of Ghana is doing far more than stabilising inflation; it is fundamentally resetting the country’s financial system.

For years, banks operated in a high-yield environment where government securities offered returns ranging from 20% to over 30%, driven largely by inflationary pressures and fiscal imbalances. At the peak of the crisis in 2022 and 2023, the 91-day Treasury bill rate exceeded 35%, creating one of the most attractive risk-free investment environments in Ghana’s recent financial history.

That era is now drawing to a close.

As of early 2026, Treasury bill rates have declined significantly, hovering between approximately 10.88% and 15.74%. At the same time, inflation, which surged above 50% in late 2022, has fallen sharply and is now below 5%, continuing on a downward trajectory.

This is not a crisis.

It is a moment of truth.

Beneath the high Treasury bill rates of recent years lay a structural imbalance that many chose to ignore.

For much of that period, banks were able to generate substantial profits simply by lending to government, while the productive sectors of the economy struggled under the weight of expensive credit, delayed payments, and limited access to financing.

A difficult but necessary question emerged: while factories slowed, contractors collapsed under debt, and businesses fought to survive, why were some banks still posting record profits?

That should concern any serious economy, because finance is meant to support production, not detach itself from it.

When Banks Thrived, Industry Struggled

During the period of elevated Treasury bill rates, banks benefited from easy and highly attractive returns.

At the height of the crisis, government securities offered yields above 30%, creating a compelling incentive to invest in sovereign debt rather than extend credit to businesses.

Why take the risk of financing factories, agriculture, SMEs, or contractors when government debt offered:

Exceptionally high returns Minimal perceived risk Predictable repayment Limited operational burden

As a result, a significant portion of banking assets shifted toward government securities rather than private sector lending. In some institutions, Treasury instruments became one of the most profitable and least demanding business lines.

While the financial sector enjoyed strong returns, the productive economy came under severe strain.

Contractors Became Unwilling Financiers of Government

Government contractors frequently waited between 18 months and three years to receive payment for completed projects.

This led to:

Stalled projects Collapsing cash flows Loan defaults Business closures

Public sector arrears ran into billions of cedis, effectively forcing contractors to finance government operations at significant cost to their own businesses.

High Taxes, Limited Profitability

To sustain elevated interest obligations, businesses continued to face substantial tax and compliance burdens.

With a corporate tax rate of 25%, alongside additional levies and regulatory costs, many firms found themselves squeezed between delayed payments and rising operating expenses.

For numerous companies, profitability became increasingly elusive.

Credit Became Expensive or Unavailable

As Treasury bills offered attractive risk-free returns:

Banks had less incentive to lend to businesses Lending rates rose to 35%–40% SMEs were effectively excluded from formal credit markets

The result was an economy in which productive enterprises struggled to access financing, while passive investment in government debt generated superior returns.

A Simple Business Reality

Consider the arithmetic confronting many businesses:

Borrow at 35%–40% interest Pay 25% corporate tax Cover raw materials, salaries, utilities, logistics, and overheads

Where was sustainable profit supposed to come from?

In many cases:

Revenue could not keep pace with financing costs Margins were eroded before production scaled Businesses survived, but did not grow

This was not a sustainable economic model. It was a gradual erosion of productive capacity.

A Distorted Economic Structure

The system increasingly rewarded financial passivity over productive investment.

Beneficiaries

Banks earning Treasury bill income Government borrowing programmes Short-term investors

Those Under Pressure

Contractors SMEs Manufacturers Agricultural enterprises

The broader consequences included slower industrialisation, weaker job creation, and reduced local value addition.

When banks posted strong profits while the real economy contracted, it reflected not financial strength, but structural imbalance.

The Reset: The End of Easy Money

Today, declining Treasury bill rates signal a new economic reality:

Government borrowing costs are easing Inflation is stabilising Risk-free banking profits are diminishing

Banks must increasingly earn returns by financing productive sectors of the economy rather than relying heavily on government securities.

This shift aligns Ghana with the model seen in successful emerging economies, where financial institutions generate profits by supporting enterprise, manufacturing, agriculture, and exports.

Banks are now expected to:

Finance industries Support SMEs Back agriculture Expand manufacturing Promote exports The Real Test for Banks

Banks must transition from:

Passive income to active financing Risk avoidance to disciplined risk management Government dependence to private sector growth

The critical question is whether institutions that prospered in a low-risk environment can adapt to a system where profitability depends on expertise, innovation, and long-term commitment.

Real banking is not passive. It requires deep sector knowledge, effective credit assessment, and a willingness to finance productive growth.

The New Responsibility

To remain relevant and profitable, banks must embrace a broader developmental role.

1. Partner with Cooperatives

Working with cooperatives can:

Enable group lending Reduce credit risk Expand access for farmers, traders, and small businesses 2. Finance Entire Value Chains

Banks should support complete production ecosystems by:

Funding producers, processors, and distributors Using structured offtake agreements 3. Collaborate with Fintechs

Partnerships with fintech companies can provide:

Digital credit scoring Lower operating costs Greater market reach 4. Leverage Mobile Money

With more than 60 million registered mobile money accounts in Ghana, mobile transaction data represents a major opportunity for:

Data-driven lending Scalable microcredit Agricultural financing A National Opportunity

If banks respond effectively:

SMEs will gain access to capital Agriculture will become more bankable Manufacturing will expand Imports will decline while exports grow Employment will increase

Ghana’s credit-to-GDP ratio remains below 20%, compared with over 100% in many advanced economies. This gap represents not weakness, but significant untapped potential.

Final Word

The past several years exposed a hard truth:

An economy cannot achieve sustainable growth when finance prospers while production suffers.

Lower Treasury bill rates are helping to correct that imbalance.

They are not a sign of weakness, but a test of innovation, discipline, and responsibility.

If this transition fails, it will not be because of policy alone, but because financial institutions chose comfort over transformation.

The era of easy money is ending.

The era of real banking and real economic growth has begun.