Executive takeaway
The decision for a finance director is whether today’s available funding improves the company’s cash position over the remaining life of its existing loan. A lower advertised rate is only the start of that calculation. Refinancing may help a viable business, but switching fees, security requirements or faster principal repayments can absorb the benefit. IDER’s recommendation is to run a documented facility review before the next renewal, using firm quotations and a realistic collections forecast. Separate the decision to reduce financing cost from the decision to increase borrowing: they require different evidence.
What the evidence shows
The Bank of Ghana held its policy rate at 14.0% on 24 September 2026. Its release reports average bank lending rates of 15.9% in August, down from 24.2% a year earlier. Private-sector credit grew 35.5% year on year, or 29.0% after adjusting for inflation. These are sector aggregates, not an offer to a particular borrower. [S1]
Credit also has a sector pattern. BoG’s July Monetary Policy Report records services, commerce and finance, and construction receiving a combined 71.4% of bank lending at end-June 2026. That concentration identifies where lending sits; it does not measure unmet demand or demonstrate discrimination against other sectors. [S2]
BoG’s September assessment still describes credit risk as elevated. A borrower should therefore expect repayment evidence to matter alongside the interest-rate environment. Neither the policy rate nor the published average supplies the company’s credit spread, fees, collateral valuation or approval conditions. Those inputs must come from the lender’s written proposal. [S1]
Why this matters
Build the comparison around dated cash flows. List the outstanding principal, contractual interest, scheduled repayments, final maturity and any break costs on the existing facility. For each replacement offer, add arrangement fees, legal and valuation costs, required deposits and the timing of drawdown. Compare like-for-like funding amounts and periods. Where the proposed loan extends the maturity, show the extra interest paid for that additional time separately from any immediate monthly relief.
A working-capital facility should be tested against the operating cycle it finances. Inventory may take time to sell; an invoice may take longer to become cash. A loan can look affordable on an annual profit forecast while requiring repayment before customer receipts arrive. Use the weekly cash forecast to locate that mismatch, then discuss staged repayments, revolving limits or a smaller funding request with the lender. The appropriate structure depends on the documented cycle, not the sector average.
For a bank credit committee, the same distinction supports better allocation. A prospective borrower’s growing sales are not equivalent to available debt-service cash. Ask whether customer concentration, disputed invoices or stock obsolescence changes the repayment case. Improving the quality of a credit file can support a sound lending decision without assuming that a lower policy rate should automatically override borrower risk.
Who is affected differently
A borrower with a floating rate needs to inspect the reset formula and next review date. A fixed-rate borrower needs a break-cost quotation before assuming that a new market rate is accessible. Businesses whose sales are seasonal should test the weakest collection period, while enterprises with steady contracted receipts can assess repayment schedules against those dates. The distinction is about cash timing, not a ranking of sectors.
Smaller firms may have fewer lender offers and less formal management information. Their first improvement may be a reconciled sales ledger, bank statements and an explanation of overdue receivables. Larger firms may have more negotiating options but also cross-default clauses and security shared across facilities. Before moving one loan, the finance director should check how the change affects the rest of the funding package.
Recommended actions
What to watch next
Sources, limitations and next step
Evidence boundaries
Research cut-off: 26 September 2026. Lending observations describe August; sector allocation describes June. Public aggregates do not reveal this business’s approval probability, effective financing cost or available collateral. The proposed comparison is a management method, not a calculation already performed for an IDER client. No saving is claimed without the borrower’s contracts and quotations.