Deloitte West Africa Optimistic About Ghana’s Banking Resilience Amid Macroeconomic Challenges

Deloitte West Africa has expressed confidence in the resilience of Ghana’s banking system, despite ongoing challenges stemming from both exogenous and endogenous macroeconomic factors.

The professional services firm shared this view in its latest economic brief, which focused on the Monetary Policy Rate (MPR) in Ghana and Nigeria.

The report comes as the Bank of Ghana (BoG) revealed the findings of its latest confidence surveys conducted in October 2024. The surveys indicated a continued recovery in sentiment, with business confidence notably improving. Firms reported meeting their short-term targets and expressed optimism for the future of their companies and industries. The Bank of Ghana’s findings were aligned with trends observed in the country’s Purchasing Managers’ Index (PMI), which rose to 50.6 in October 2024 from 49.1 in September, signaling improved business conditions.

In response to these findings, Deloitte expressed that the Bank of Ghana’s decision to maintain the policy rate at 27% would help anchor inflation expectations, despite short-term pressures. This rate is expected to support the recovery of the cedi and ensure external sector stability. Furthermore, Deloitte believes that the unchanged policy rate will boost both business and consumer confidence, fostering a positive economic environment.

The MPC’s decision was driven by slightly elevated inflation, despite a rebound in the stability of the Ghanaian cedi and a generally stable domestic economy. Deloitte remains optimistic that this policy rate will support economic growth and prevent further inflationary pressures, with the strengthening of the local currency helping to stabilize prices further.

Looking ahead, Deloitte projects that Ghana’s economy will continue to pick up, fueled by rising business confidence and increasing economic activity. The firm remains confident that the Ghanaian banking sector, despite macroeconomic pressures, will continue to show resilience.

In contrast, the report highlights that in Nigeria, the MPC raised the MPR to 27.5%, the sixth increase since January 2024, amid rising inflation and pressures from higher fuel prices. Deloitte expressed concern that these increases could lead to a squeeze on disposable income, tighter credit access, and a higher cost of borrowing, ultimately impacting loan defaults and overall economic stability.

Overall, Deloitte remains optimistic about Ghana’s economic prospects, supported by prudent monetary policies and increasing confidence among businesses.