Local private businesses were the worst culprits in repaying loans taken from commercial banks for 2017.
According to the Bank of Ghana, the 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.
This is among the key findings of the Banking sector report for January this year.
The report catalogued operations in the banking industry as at December 2017.
Between December 2016 and the same period last year, the total loans that banks offered to their customers increased from GHS35.4 to GHS37.66 billion.
The Bank of Ghana’s report also put the banking sector’s non-performing loans (NPLs) at GHS8.58 billion as at the end of last year compared to the GHS6.14 billion recorded in the preceding year.
Even though loan disbursements to both indigenous and foreign private sector businesses went up for the period, the local private businesses defaulted most in terms of repaying the loans.
Of the ninety-four percent loan default attributable to the private sector, indigenous private enterprises accounted for as much as 80.6 percent of total NPLs in December 2017 compared with a share of 78.9 percent in 2016.
Their foreign counterparts on the other hand, managed to bring their percentage of loan default down to 7.9 percent from 13.2 percent in the preceding year.
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.