Collateral registry expansion boosts SME borrowing, but access gap persists

The central bank’s push to broaden credit access through an expanded collateral framework is showing results with the number of registered borrowers rising sharply over the past decade, Second Deputy Governor-Bank of Ghana Matilda Asante-Asiedu has said.

The Second Deputy Governor said reforms to the Borrowers and Lenders Act and modernisation of the collateral registry have opened the door for more small- and medium-sized enterprises (SMEs) to use non-traditional assets to secure loans.

She said the changes were designed to “build a transparent, predictable and inclusive credit environment” and reduce long-standing barriers that have limited the flow of capital to the private sector.

Nonetheless, business leaders say the gains will fall short unless lenders ease the difficulty many firms still face in securing financing.

Ghana’s credit market, she noted, has struggled with structural constraints including information gaps, narrow collateral options and weak enforcement systems – all of which have made lenders cautious and raised borrowing costs.

The updated Borrowers and Lenders Act of 2020 was intended to address these problems by strengthening legal clarity around credit agreements and expanding the types of assets that can be used to secure loans.

Ms. Asante-Asiedu said the collateral registry now accepts a wider range of movable and immovable property, including inventory, vehicles, equipment and receivables, giving SMEs alternatives beyond land and buildings.

“It doesn’t only have to be landed property,” she said, adding that the shift is helping businesses which previously lacked acceptable collateral.

The reforms have boosted registrations. Between 2010 and 2024, the number of registered borrowers increased from just 27 to 372,902. More than 1.3 million borrowers have been recorded cumulatively over the period. Women-owned businesses account for 77 percent of the growth, a trend the Deputy Governor described as an important marker of financial inclusion.

Despite the progress, she underscored a need for responsible borrowing and transparent lender-borrower relationships.

She said some borrowers misuse loans or take credit without a plan to repay, behaviour that pushes interest rates higher for everyone.

“Character, responsibility and trust remain central to credit decisions,” she said, adding that borrowers must understand their obligations under loan agreements and use funds for productive activities.

The Bank of Ghana has also issued directives on nonperforming loan (NPL) provisions to improve credit quality. Borrowers who default intentionally risk being blacklisted.

Ms. Asante-Asiedu encouraged businesses to communicate early with lenders if they face repayment difficulties, noting that banks had previously restructured facilities during the pandemic when clients were transparent about their challenges.

The Ghana National Chamber of Commerce and Industry (GNCCI) welcomed the reforms but warned that many SMEs still struggle to obtain financing even as interest rates decline.

GNCCI president Stephen Miezen said cheaper credit means little if businesses cannot access loans in the first place. “If something is cheap and you cannot get it, then it is a zero-sum game,” he said.

Mr. Miezen said access to finance remains one of the most persistent obstacles facing the private sector. While acknowledging Bank of Ghana efforts to lower borrowing costs, he urged the central bank to support measures that improve the availability of credit to businesses.

He added that sensitisation programmes are crucial because many SMEs sign loan agreements without fully understanding the terms. The chamber praised the practical demonstrations on how to register and manage collateral, saying they will help firms avoid disputes and reduce loan defaults.

Ms. Asante-Asiedu said the central bank will continue updating secured transaction frameworks and improving credit information quality to boost lender confidence and financial inclusion.

“We have an opportunity to build an ecosystem that supports credit creation and growth of our economy,” she said.

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