Macroeconomic stabilization-Implications for investors and businesses

By Sophia Kafui TEYE

Recent developments in Ghana’s macroeconomic landscape signal a cautious but notable recovery. Key indicators such as declining inflation, falling interest rates in the money market, a relatively stable exchange rate, and a downward trend in the Monetary Policy Rate (MPR) suggest that fiscal and monetary authorities have made progress in stabilizing the economy.

However, this macro-level progress has sparked mixed reactions among investors and the general public. While policymakers tout their collaborative success, many Ghanaians particularly fixed income investors are grappling with the implications of sharply reduced interest rates. The combination of lower yields and previously elevated inflation has led to periods of negative real returns, eroding the value of savings and investments.

This article delves into the real-world impact of recent macroeconomic developments on individuals and businesses in Ghana. It focuses on the implications of the declining Monetary Policy Rate (MPR) and interest rates for capital markets, highlighting emerging opportunities for raising debt and equity financing through platforms such as the Ghana Stock Exchange and the Ghana Fixed Income Market.

Beyond capital markets, the article explores how businesses can harness cheaper credit to scale operations, invest in growth initiatives, and enhance profitability. It also offers practical guidance for individual investors seeking to adapt to a low interest environment, including alternative investment strategies that deliver better risk-adjusted returns.

Finally, the article assesses the broader economic opportunities and risks associated with Ghana’s current macroeconomic trajectory. While macroeconomic stability is a promising signal, its true value lies in how effectively it translates into tangible benefits for households, entrepreneurs, and investors. This piece aims to bridge that gap connecting policy outcomes with actionable financial strategies.

What does a lower monetary policy rate mean for the everyday Ghanaian?

Lower monetary policy rate-a catalyst for credit access and economic activity

The Bank of Ghana’s recent decision to reduce the Monetary Policy Rate (MPR) from 28percent to 25percent marks a significant shift in its monetary stance, with wide ranging implications for both consumers and businesses. As the benchmark rate at which the central bank lends to commercial banks, a lower MPR typically translates into reduced lending rates across the financial system.

For individuals, this means more affordable access to credit whether for personal consumption, homeownership, or entrepreneurial ventures. For businesses, especially SMEs, the lower cost of borrowing can unlock opportunities for expansion, capital investment, and operational scaling. Coupled with falling inflation now at 12.10percent in July 2025, down from 13.7percent in June 2025 the environment is becoming more conducive to economic activity, potentially easing the cost of living and boosting consumer spending.

Trade-offs for savers and signals of economic confidence

The rate cut also presents trade-offs, particularly for savers and fixed income investors. As interest rates decline, nominal returns on savings accounts, treasury bills, and other money market instruments tend to fall, eroding income for retirees and conservative investors who rely on interest earnings. This shift underscores the importance of re-evaluating investment strategies in a low rate environment.

On the upside, the rate cut signals growing confidence in Ghana’s economic recovery, supported by a 5.3percent GDP growth in Q1 2025. As consumer and business sentiment improves, the financial ecosystem is likely to see increased activity in both debt and equity markets. Investors and entrepreneurs who understand these dynamics can position themselves to take advantage of emerging opportunities whether through strategic borrowing, portfolio diversification, or tapping into capital markets for growth financing.

Leveraging credit to build assets and drive economic participation

The Ghana Reference Rate (GRR) is determined by a combination of the Monetary Policy Rate (MPR), the 91-day Treasury bill rate, and interbank lending rates. With the recent reduction of the MPR to 25percent, average lending rates in Ghana have seen a notable decline, currently ranging between 18percent and 23percent.

This shift presents a strategic opportunity for individuals particularly salaried workers and entrepreneurs to access credit at more affordable rates. Unlike previous years when interest rates exceeded 33percent, making borrowing prohibitively expensive, the current environment is far more conducive to financing key initiatives such as home construction, business expansion, and asset acquisition. These investments not only enhance personal financial well-being but also stimulate broader economic growth through job creation, increased productivity, and improved living standards.

Strategic borrowing – Value creation over consumption

While lower interest rates make borrowing more attractive, it is important to approach credit strategically. Loans are not free money they come with repayment obligations that include both principal and interest.

Therefore, individuals should prioritize borrowing for value adding purposes that generate returns or build long term assets. Whether it is investing in income generating ventures or acquiring property, the goal should be to use credit as a tool for wealth creation rather than consumption. Responsible borrowing aligned with financial planning can help sustain the economic gains Ghana is currently experiencing and empower individuals to participate meaningfully in the recovery.

Exploring alternative investments in a low-interest environment

For decades, many Ghanaian investors have relied heavily on fixed-income instruments such as treasury bills, fixed deposits, government bonds, and corporate notes to generate predictable returns.

These instruments have historically offered relatively high yields, making them rewarding for conservative investors seeking stable income. However, with the recent decline in interest rates, many are finding it increasingly difficult to meet their return expectations. This shift calls for a more strategic approach to investing one that goes beyond single instrument reliance and embraces diversification.

Building a diversified portfolio with professional guidance

To navigate this evolving landscape, investors should consider constructing diversified portfolios that blend various asset classes. This approach spreads risk and enhances the potential for higher returns.

Creating such a portfolio requires the expertise of licensed Portfolio Managers professionals regulated by the Securities and Exchange Commission (SEC), who have the tools, systems, and experience to tailor investment strategies to individual needs.

Based on an investor’s objectives, risk tolerance, and time horizon, these managers can allocate funds across fixed income, money market instruments, equities, unit trusts, private equity, and more. A well diversified portfolio not only cushions against market volatility but also positions investors to benefit from growth opportunities across sectors of the economy.

Investing in equities- A strategic move in a low-interest environment

As returns on fixed income instruments continue to decline, the equities market is emerging as a compelling alternative for investors seeking higher returns. Historically, there is an inverse relationship between fixed income and equities when interest rates fall, equity markets often become more attractive.

This trend is evident on the Ghana Stock Exchange (GSE), where, as of August 5, 2026, the GSE Composite Index has delivered a year-to-date return of 43.31percent, while the Financial Stock Index has returned 44.01percent. These figures highlight the strong performance of listed companies and the potential for capital appreciation.

For investors with a moderate to high risk appetite, equities offer an opportunity to grow wealth beyond the limitations of traditional fixed income products. However, navigating the stock market requires informed decision-making and access to market insights. That is where Licensed Dealing Members (LDMs) of the Ghana Stock Exchange commonly known as stockbrokers play a critical role. These professionals can guide investors in selecting the right stocks, timing market entry, and building a balanced equity portfolio aligned with their financial goals.

What is in it for businesses? -Unlocking affordable capital and sustainable growth

Historically, the cost of financing a business in Ghana has been prohibitively high, with interest rates often exceeding 30percent. This has placed immense pressure on business owners who rely heavily on debt financing, many of whom struggle to generate sufficient returns to service their loans. Compounding the issue is the scarcity of patient capital and long term funding that allows businesses to grow sustainably. In the absence of robust private equity options, many entrepreneurs resort to short term loans to fund long term projects, leading to liquidity challenges and, in some cases, business failure due to financing mismatch.

The current macroeconomic environment however, presents a unique opportunity for businesses to access more affordable and structured financing through the capital markets. The Ghana Stock Exchange (GSE) and the Ghana Fixed Income Market (GFIM) offer platforms for raising both equity and debt capital.

The GSE’s Main Market or the Ghana Alternative Market (GAX) presents opportunity for businesses to raise patient capital. Companies such as Samba Foods Plc, Meridian Marshalls Holding Company, and Digicut Production & Advertising Plc have successfully listed on the GAX. Similarly, GFIM hosts corporate debt issuances from firms like IZWE Loans, Bayport, Kasapreko, and Quantum. These companies took advantage of the available platforms to issue both debt and equity instruments to raise funds for their respective companies.

Listing requirements are accessible, with minimum stated capital thresholds of GH¢1 million for the Main Market and GH¢250,000 for GAX, alongside public float and shareholder spread criteria. For debt issuances, companies must demonstrate a minimum tangible net worth of GH¢5 million, a clean credit history, and either profitability or a credible financial plan. With interest rates now lower, businesses can issue corporate bonds and commercial papers at more favourable terms unlocking capital for expansion, innovation, and long-term resilience.

Processes and procedures for the issuances

The issuance process involves several key stages to ensure regulatory compliance and market success. Structuring is the initial phase, where critical elements such as tenor, pricing, and target investors are defined, aligning with market expectations and regulatory standards.

This is followed by Regulatory Approval, which entails securing clearances from relevant authorities including the SEC, GSE, and GFIM, and meeting all disclosure, rating, and issuance requirements. The Documentation phase involves preparing an Information Memorandum, regulatory filings, credit rating reports, and investor disclosures to ensure transparency and compliance. Finally, Marketing and Issuance focuses on engaging potential investors through roadshows, presentations.

Compliance requirements and best practices

Upon listing on either the Ghana Alternative Market (GAX) or the Ghana Stock Exchange (GSE), issuers are required to adhere to stringent corporate governance standards. These include:

• Publishing audited financial statements.
• Providing periodic updates to investors on company performance, particularly through Annual General Meetings (AGMs) for equity issuers.

For debt issuers listed on the Ghana Fixed Income Market (GFIM), the following compliance obligations apply:

• Quarterly Compliance Reporting: Issuers must submit quarterly compliance reports to both the Securities and Exchange Commission (SEC) and GFIM.
• Disclosure of Financial Condition: Any material changes in financial condition that may affect the issuer’s ability to repay commercial paper (CP) must be disclosed.
• Anti-Money Laundering (AML) Compliance: Issuers must comply with AML guidelines issued by the SEC and the Bank of Ghana (BoG).
• Risk Disclosure: Detailed risk disclosures must be included in the Information Memorandum.
• Liquidity Contingency Planning: Issuers are required to maintain contingency plans to mitigate default risk.

Failure to comply with these requirements may result in regulatory actions, including fines, suspension, or withdrawal of listing by the SEC and GFIM

List of professionals and their roles in corporate debt and equity issuances

Corporate debt and equity issuances require the coordinated efforts of several key professionals, each playing a distinct role to ensure a successful transaction. Investment bankers or arrangers lead the structuring of the issuance, advising on pricing, tenor, and investor targeting. Legal advisors ensure compliance with regulatory frameworks and draft essential documentation such as the Information Memorandum and subscription agreements. Auditors provide assurance on the financial statements, which are critical for investor confidence and regulatory approval.

Credit rating agencies assess the issuer’s creditworthiness, especially for debt instruments, influencing investor perception and pricing. Regulatory consultants or compliance officers guide the issuer through approval processes with bodies such as the SEC, GSE, and GFIM.

Marketing and communications teams manage investor engagement through roadshows and presentations, while trustees and registrars oversee post-issuance obligations, including monitoring compliance and managing investor records. Together, these professionals ensure transparency, regulatory alignment, and market readiness throughout the issuance lifecycle.

Conclusion

Ghana’s macroeconomic stabilization presents a mixed but promising outlook for investors and businesses. While declining inflation, falling interest rates, and a stable exchange rate signal progress, the real impact lies in how these shifts translate into financial opportunities and challenges for everyday Ghanaians. Lower interest rates have opened doors to affordable credit, enabling individuals and businesses to invest in growth, build assets, and participate more actively in the economy.

However, they also demand a strategic rethink for savers and fixed income investors, who must now explore alternative investment avenues to preserve and grow wealth. As Ghana continues on its path to recovery, informed financial decision-making grounded in an understanding of macroeconomic trends will be key to unlocking long-term value.

For investors, entrepreneurs, and households alike, the current environment offers both opportunities and responsibilities in shaping a resilient and inclusive economic future.

Disclaimer: Views expressed in this article are the personal views of the author and does not reflect the views of the organization she works for. Email Address: [email protected].

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