For much of the last decade, Ghanaians watched their banking sector lurch from one crisis to another: a punishing capital clean-up, a pandemic, a currency collapse and a domestic debt exchange that weakened the balance sheets of the very banks meant to anchor the economy. The human and institutional cost of the banking-sector clean-up was immense. Between 2017 and 2019, authorities shut down nine commercial banks, 347 microfinance companies, 15 savings and loans companies, 39 microcredit and money-lending institutions, eight finance houses, and two non-bank financial institutions. In total, 420 financial institutions collapsed, costing over 10,000 jobs. The figures tell a troubling story: while these institutions reportedly required GH¢9 billion to survive, government ultimately spent GH¢25 billion on the clean-up. The total assets taken over for the 420 defunct institutions amounted to GHȻ26.05 billion (7.45% of GDP). Against this costly history, John Dramani Mahama’s government pursued an economic recovery approach that marked a disciplined break from the past. Within eighteen months, recapitalised banks, lower borrowing costs, greater currency stability and renewed engagement with bank leaders suggest a recovery built on stabilisation, accountability and confidence, while recognising that important risks remain.
“We Chose to Spend to Save a Bank”
Nowhere is that break clearer than in the government’s handling of the National Investment Bank (NIB). Presenting the 2025 Mid-Year Budget Review to Parliament, Dr Cassiel Forson, Ghana’s Minister of Finance, did not mince words about the contrast between the two approaches to banking distress. He told the House that, unlike the previous administration, the John Dramani Mahama government chose to spend to save a bank rather than spend to collapse one—a line that captures the philosophical gap between the Akufo-Addo and John Mahama eras of banking policy. The numbers back up the rhetoric. NIB’s capital adequacy ratio collapsed to a deeply negative level—by some accounts as low as -51.13% to -53.13%—by the end of 2024. Through a GH¢450 million cash injection, GH¢1.5 billion in re-marketable bonds, and the transfer of GH¢500 million in government-held Nestlé Ghana shares to the bank, the Finance Ministry engineered a turnaround that pushed NIB’s capital adequacy ratio to roughly 23% by May 2025. In the process, the government says it protected GH¢6.4 billion in depositor funds and preserved more than 900 direct jobs — outcomes that stand in stark relief against the job losses and shuttered institutions of the 2018–2019 clean-up. NIB’s own audited numbers have since confirmed that recovery. The bank closed the 2025 financial year with a profit after tax of GH¢343.9 million, up from a bare GH¢2.7 million in 2024, when the bank’s capital adequacy stood at roughly negative 47%, and its retained deficit exceeded GH¢2 billion. Total assets more than doubled to GH¢12.22 billion from GH¢5.84 million in 2024; customer deposits rose from GH¢6.47 billion to GH¢10.20 billion; loans and advances increased from GH₵670 million to GH₵730 million in the same period; and total equity climbed to GH¢1.55 billion. Management has been candid that non-performing loans, while down from 76% to 69.7% of the book, remain very high — a reminder that NIB’s turnaround, while real, is a multi-year repair job rather than a completed one.
ADB’s Turnaround: From Insolvency to a GH¢367 Million Profit
If NIB has been the government’s headline case study, Agricultural Development Bank (ADB) PLC supplies a second, independently audited data point for the same underlying story. ADB recorded a profit after tax of GH¢367.29 million for the year ended December 31, 2025 — a sharp reversal from the GH¢225.09 million loss it posted in 2024 — according to signed summary financial statements released on March 31, 2026. Profit before tax came in at GH¢580.82 million, against a loss before tax of GH¢225.09 million in 2024. ADB’s balance-sheet recovery has been as striking as its return to profitability. Following a GH¢850 million recapitalisation and recovery drive championed by the Finance Ministry, its capital adequacy ratio rose from negative 3.15% to 27.17%, while its common equity Tier 1 ratio improved from negative 6.15% to 25.17%. Total assets increased to GH¢17.89 billion from GH¢14.60 billion, and equity nearly doubled to GH¢2.48 billion from GH¢1.28 billion. Recoveries of GH¢381.4 million from non-performing loans supported earnings, alongside stronger interest income, fees, commissions and trading income. Total operating income rose to GH¢1.75 billion, while impairment charges declined, signalling a cleaner loan book. Deposits and cash balances also increased substantially. Together with NIB, ADB’s audited results show a bank that was underwater in 2024 becoming solvent, liquid and profitable within a year.
The rest of the results tell a story of a bank rebuilding on multiple fronts at once. Interest income rose to GH¢2.09 billion from GH¢1.57 billion, and net interest income nearly doubled to GH¢1.37 billion from GH¢723.18 million. Fees and commissions rose to GH¢284.48 million, and net trading income to GH¢106.47 million, pushing total operating income to GH¢1.75 billion from GH¢1.00 billion. At the same time, impairment charges on loans and advances fell to GH¢231.78 million from GH¢302.92 million, suggesting a cleaner loan book rather than just a larger one. Customer deposits grew to GH¢13.22 billion from GH¢12.05 billion, and cash and bank balances rose to GH¢9.90 billion from GH¢7.18 billion — though loans and advances to customers actually contracted to GH¢2.01 billion from GH¢2.57 billion, a sign that ADB’s recovery has, for now, leaned more on recapitalisation, recoveries, investment income and balance-sheet caution than on fresh lending growth.
The Bank of Ghana’s Own Balance Sheet: A Recapitalisation Long Promised, Now Committed
Ghana’s banking sector’s recovery extends beyond NIB and ADB to the Bank of Ghana’s own balance sheet, which was heavily affected by losses incurred during the Domestic Debt Exchange Programme. The government has therefore adopted a structured approach to restoring the Central Bank’s financial position, recognising that a strong and credible Bank of Ghana is essential to sustaining macroeconomic stability and confidence in the financial system. In January 2026, Bank of Ghana Governor Dr Johnson Asiama indicated that discussions with government on recapitalisation had been constructive and that support was imminent. He stressed that restoring the Bank’s capital position was necessary to deliver price stability, financial-sector supervision, and broader macroeconomic management effectively, particularly after the Central Bank absorbed substantial losses while helping stabilise the economy. By May 2026, the government had formalised this commitment by pledging to fully recapitalise the Bank of Ghana by 2032. An amendment to the Bank of Ghana Act introduced an automatic recapitalisation mechanism, requiring government to restore the Bank’s capital whenever it falls below its statutory minimum. The IMF welcomed the arrangement as part of a credible, durable recovery framework and supported interim measures, including selling part of BoG’s gold holdings, to strengthen its balance sheet. The task remains substantial. BoG recorded an operating loss of GH¢15.63 billion in 2025 and an additional GH¢19.32 billion loss in other comprehensive income, largely from revaluation losses as the cedi appreciated. Consequently, negative equity widened from GH¢61.32 billion to GH¢96.28 billion. Meanwhile, 21 of Ghana’s 23 banks met capital adequacy requirements by December 2025, indicating wider sector recovery, though full compliance and the Central Bank’s recapitalisation remain important unfinished priorities.
Ghana’s Broader Fiscal and Economic Turnaround
Banks do not operate in isolation. When government borrowing is excessive, inflation rises, the cedi weakens and Treasury bill rates climb, banks often shift resources away from productive lending to government securities. Businesses then struggle to access affordable credit, while banks become increasingly exposed to sovereign risk. This is why fiscal discipline matters for the health of the banking sector. The evidence from 2025 points to a marked improvement in Ghana’s macroeconomic environment. Inflation fell from 23.8 per cent in December 2024 to 5.3 per cent by May 2026, while growth strengthened and international reserves improved. These outcomes set the stage for the Bank of Ghana to cut its policy rate from 30 per cent in 2023 to 14 per cent by March 2026, where it was maintained in May 2026. The rescue of NIB and ADB forms part of a wider macro-financial turnaround that has strengthened Ghana’s banking sector and restored confidence in the economy. The government’s fiscal consolidation measures have helped lower Treasury bill rates, saving the state GH¢8.8 billion in interest payments between January and September 2025. Public debt has also declined significantly, reaching GH¢674.1 billion, or 42.2% of GDP, by February 2026, compared with 44.7% of GDP at the end of 2025. Fiscal performance has exceeded expectations. In the first quarter of 2026, Ghana recorded a commitment-basis surplus of 0.1% of GDP against a targeted deficit of 1.2%, while the primary balance achieved a surplus of 1.2% against a 0.2% target. Earlier, the 2025 mid-year review showed a primary surplus of 1.1% of GDP, ahead of the 0.4% target, with the fiscal deficit at 0.7% against a projected 1.8%. Stronger corporate tax and mineral royalty collections helped non-oil tax revenue exceed target by GH¢787 million. These gains have improved Ghana’s international standing. Fitch Ratings upgraded Ghana to B with a Positive Outlook in May 2026, citing fiscal discipline, lower debt, cedi appreciation, growing reserves and stronger external balances. On 9 October 2026, Moody’s Ratings also upgraded Ghana’s long-term sovereign issuer rating from Caa1 to B3, while revising its outlook from positive to stable. Moody’s cited sustained easing in domestic financing conditions, lower government borrowing costs, improved debt affordability and continued fiscal discipline, supported by favourable export prices and greater macroeconomic stability. The agency also raised Ghana’s local-currency country ceiling from B1 to Ba3 and its foreign-currency country ceiling from B2 to B1. Although B3 remains a speculative-grade rating associated with high credit risk, the upgrade further recognises Ghana’s improving credit profile and economic recovery. Ghana also returned to the domestic bond market in April 2026, raising GH¢3.8 billion through a seven-year bond, signalling renewed investor confidence. The banking sector has benefited directly from this improved environment. Total industry assets grew by 26.6% year-on-year to GH¢493.9 billion by April 2026, driven by deposits, borrowing, and shareholders’ funds. Overall, the government’s fiscal discipline, improved debt management and engagement with banks have created a more stable foundation for banking-sector recovery and sustainable growth.
What the Economic and Banking Recovery Means for Ghanaians
For ordinary Ghanaians, the banking recovery could mean safer deposits, fewer fears of bank closures and stronger purchasing power as inflation and currency volatility ease. Stabilising indigenous banks also protects jobs, suppliers and communities that depend on them. However, benefits may not be immediate: prices remain sensitive to energy costs, the cedi can still weaken, and loan repayments may remain costly. For businesses, a more stable cedi and higher reserves improve the ability to price imported inputs, negotiate contracts and manage foreign-currency obligations. Over time, lower Treasury bill and policy rates should reduce borrowing costs and encourage banks to shift more funds toward productive lending rather than government securities. Yet banks remain cautious, and high non-performing loans mean small and medium-sized enterprises may still face tight collateral requirements and limited access to affordable credit. For government, lower debt ratios, falling domestic interest costs and improved access to longer-term borrowing create more fiscal space for infrastructure, health, education and productive investment. Stronger banks also reduce the risk of another costly financial-sector clean-up funded by taxpayers. The key responsibility now is to sustain fiscal discipline, complete the Bank of Ghana’s recapitalisation and ensure that public support for banks delivers stronger lending and governance. Internationally, Ghana’s rating upgrades, stronger reserves, improving debt indicators and return to the domestic bond market strengthen its credibility with investors, development partners and global markets. This can attract investment, lower perceived country risk and improve access to finance. The lasting test will be whether Ghana converts renewed confidence into sustained growth, jobs and resilient private-sector expansion.
Contrast With the Previous Decade
Ghana’s recent banking-sector progress must be understood against the severe disruptions of the previous decade. The 2017–2019 banking-sector clean-up reduced the number of banks from about 33 to 23, with five institutions consolidated into the newly created Consolidated Bank Ghana and others closed. Across the sector, an academic study records that 420 financial institutions lost their licences, including nine commercial banks, savings-and-loan companies, finance houses, microfinance institutions and microcredit companies. Assets taken over were estimated at GH¢26.05 billion. The fiscal cost was enormous. Former President Akufo-Addo said the clean-up cost GH¢21 billion, or about 7.1% of GDP, while other official and IMF estimates have ranged from roughly GH¢19 billion to nearly GH¢30 billion, depending on what is included. Beyond the cost to taxpayers, the process disrupted thousands of jobs and livelihoods and weakened public confidence in the financial system. It also reinforced the damaging relationship between banking instability and public debt. The 2022 Domestic Debt Exchange Programme further worsened the situation by imposing major losses on banks holding government securities. Institutions such as GCB, CBG and ADB, as well as private banks including Fidelity, CalBank, Prudential Bank and UMB, absorbed significant impairments. The Ghana Amalgamated Trust scheme also imposed costly repayment obligations on participating indigenous banks, which in some cases worsened undercapitalisation. Persistent non-performing loans underline the depth of these structural problems. NPLs have remained above the internationally recognised 10% distress threshold in most years since 2015.
The Bigger Picture
Taken together, the recovery of NIB and ADB, the commitment to recapitalise the Bank of Ghana by 2032, improved commercial-bank capital adequacy, board reforms at NIB and CBG, falling Treasury bill rates, stronger reserves, a more stable cedi, sovereign credit-rating upgrades and improved engagement with the banking industry point to a meaningful shift in Ghana’s financial-sector management under the leadership of H.E. John Dramani Mahama. The government’s approach has combined bank rescue, fiscal discipline, stronger governance and greater transparency. These measures affect the key conditions that shape banking-sector stability: the exchange rate, interest rates, capital buffers, government borrowing costs, investor confidence, and banks’ overall ability to lend safely and protect depositors. The audited recoveries of NIB and ADB provide tangible evidence that targeted recapitalisation, stronger management, and a more stable macroeconomic environment can restore institutions that previously faced serious capital challenges. The broader policy framework is also significant. Improved fiscal performance, lower debt levels, stronger reserves and credit-rating upgrades have further supported confidence in the financial system. However, the recovery remains unfinished. NIB’s non-performing loans remain near 70%, the cedi has surrendered part of its 2025 gains, inflation rose modestly in mid-2026, and interest costs remain high relative to government revenue. Most importantly, the Bank of Ghana’s negative equity widened to GH¢96.28 billion in 2025, showing that the effects of the domestic debt exchange will take years to fully resolve. The emerging record is therefore not a final victory, but a credible turnaround. It reflects a government choosing to stabilise and rebuild viable institutions, while remaining responsible for sustaining reforms, resolving structural weaknesses and protecting public confidence in Ghana’s banking sector.
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Julius Karl D. Fieve is an Economist and Development Finance Expert with over 12 years of experience supporting sustainable development across Africa, Asia and the Americas. His work focuses on inclusive finance, gender equality, climate and sustainable investment, partnerships, and financial market development. Julius holds master’s degrees—an MSc in Africa and International Development from the University of Edinburgh, UK, an MSc in Economics, and a BSc in Actuarial Science. Actuarial Science, both from the Kwame Nkrumah University of Science and Technology (KNUST).