21/05/2026
On 19th May, the Institute of Economic Affairs (IEA) hosted a highly engaging policy dialogue that brought together researchers, policymakers, and finance professionals to examine the relationship between interest rates, banking, and economic growth in Ghana. The event featured two compelling presentations from Dr. Sajid M. Chaudhry and Epiphany Anaba of Aston Business School, Aston University, UK.
Dr. Chaudhry's research examined whether monetary easing in Ghana actually reaches the real economy and the findings were illuminating.
💡 Lower lending rates are associated with stronger GDP growth, but only when banks genuinely translate those cuts into affordable credit for businesses and households.
💡 Credit to the private sector is a critical transmission channel. Without it, policy rate reductions remain largely symbolic.
💡 Exchange rate instability and high non-performing loans significantly weaken the impact of monetary easing — meaning Ghana can cut rates and still not see the expected growth.
💡 Policy must therefore go beyond rate decisions. Strengthening bank balance sheets, stabilising the exchange rate, and deepening credit intermediation are all equally essential.
The second presentation, by Mr. Epiphany Anaba, turned the spotlight on the profitability and risk profile of Ghana's banking sector and made a bold case for a permanent bank tax.
💡 Ghana's banks are among the most profitable in Africa, consistently outperforming peers in Nigeria, Kenya, and Angola. Yet much of that profit is driven by investment in government treasury securities rather than lending to the productive sector.
💡 Event study analysis of the National Fiscal Stabilisation Levy (NFSL) showed that investors did not view the bank tax negatively —in fact, cumulative abnormal returns around the levy's reinstatement were positive and statistically significant for most banks.
💡 The researchers proposed three taxation approaches: a tax on risky liabilities, a tax on profits (building on the existing GSL framework), and a tax on treasury securities investments with detailed revenue projections for each.
💡 A 1% tax on treasury securities alone could yield approximately GHS 577 million, while a 5% profit tax on the top 10 banks could generate around GHS 264 million, revenue that could be directed toward Ghana's development goals and green investments.
Thank you to all speakers, discussants, and participants who made this dialogue so rich and impactful. 🇬🇭
