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Loan Defaulters Local businesses are the worst culprits in repaying loans

The banking sector’s non-performing loans (NPLs) as at 2016 was 6.14 billion cedis. However, NPLs at the end of 2017 increased to 8.58 billion.

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The Bank of Ghana (BoG) had said that a lot more local private businesses failed to repay their loans taken from commercial banks in 2017.

In a report by the Central Bank, it stated that the local businesses constituted 80.6 percent of loan default attributable to the private sector for last year compared to the estimated 7.9 percent of loan default attributable to the private sector, recorded by foreign businesses.

The report catalogued operations in the banking industry as at December 2017.

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The total loans bank gave to their customers increased from 35.4 billion cedis in 2016 to 37.66 billion cedis in 2017.

Meanwhile, the banking sector’s non-performing loans (NPLs) at 8.58 billion cedis as at the end of last year compared to the 6.14 billion cedis recorded in the preceding year.

Despite the increase in loan disbursement for both indigenous and foreign private sector businesses, the local private businesses defaulted most in terms of repaying the loans.

The total loan default attributed to the private sector is 94 percent. However, indigenous private companies accounted for as much as 80.6 percent of total NPLs in December 2017 compared with a share of 78.9 percent in 2016.

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In a related development, the foreign private enterprises recorded 7.9 percent. This is a reduction from the 2016 figure of 13.2 percent.

Meanwhile, the public sector’s contribution to the industry’s NPLs increased from 3.2 percent in December 2016 to 5.7 percent in December 2017.

It is however not certain, what factors accounted for the inability of local businesses to repay for loans contracted from banks.

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