Banks credit to the private sector in 2019 has been skewed towards indigenous enterprises, a report from the Bank of Ghana has revealed.
According to the Banking Sector Report for January 2020, credit to indigenous enterprises was the largest component of private sector credit, accounting for 55.4 percent of total credit as at December 2019 while foreign companies were allocated 8.4 percent of total credit from the banking sector, summing up to the 63.8 percent share allocated to private enterprises.
Private sector credit grew by 17.9 percent to GHc 39.36 billion over the 12 month period to December 2019 after contracting by 3.4 percent over the corresponding period up to December 2018.
Generally, credit growth gained momentum at year-end, with gross loans and advances (excluding the loans under receivership) increasing by 23.6 percent in December 2019 against a contraction of 3.7 percent in December 2018.
Private sector credit still constitutes the largest proportion of credit in the banking sector. Its share however declined to 87.1 percent in December 2019 from 91.4 percent in December 2018 while the share of public sector credit accordingly increased to 12.9 percent from 8.6 percent during the review period.
This, the report explains as being due to the dip in the relative share of private sector credit in total credit reflected in declines in the share of credit to households and private enterprises.
Specifically, the share of credit to private enterprises declined to 63.8 percent from 66.3 percent while the share of household credit dipped to 20.8 percent from 22.9 percent over the same comparative period