Fidelity Bank Founder: Ghanaian Banks Awash with Capital but Starved of Bankable Projects

Ghanaian banks have more money to lend than they can responsibly deploy, with the persistent shortage of viable, well-structured projects—rather than a lack of capital—remaining the binding constraint on private-sector credit, the founder of Fidelity Bank has said.

Edward Effah, speaking in an interview with Bernard Avle on Channel One TV’s The Point of View on Monday, said the banking industry’s loan-to-deposit ratio has hovered around 50 percent, meaning a substantial share of depositor funds is being channeled into government securities instead of business loans. “Capital is not the problem,” Effah said. “Know-how in accessing capital, I think, is the problem.”

“Over the last 10 years, I can confidently say that all banks have had more capital they want to give away than the number of viable projects we receive,” he added. “So, we don’t have enough viable projects, which tick the boxes.”

The remarks come as Bank of Ghana data show the industry’s loan-to-deposit ratio has declined for six consecutive years, falling from 54.1 percent in 2019 to 34.1 percent in December 2025, with the ratio slipping further to 31.5 percent by April 2026. For every GH¢100 held in banks at the end of 2018, GH¢53.45 was out on loan; by December 2025, that figure had fallen to GH¢34.12 .

Effah, who founded Fidelity Bank in the mid-1990s and built it into one of Ghana’s largest indigenous lenders, acknowledged that banks would prefer to lend rather than hold government paper. “If banks had good, viable projects, they would invest more of that and less in government securities because, after all, we make money when we lend,” he said .

A Decade of Shocks and Caution

The Fidelity founder, reflecting on the bank’s 20-year history, outlined the scale of losses the institution absorbed from successive economic shocks—losses that help explain why Ghanaian banks remain circumspect about credit risk.

“DDEP, we had to write off 1.4 billion for just holding government securities,” Effah said, referring to the Domestic Debt Exchange Programme launched in December 2022, which converted approximately GH¢137 billion in domestic notes and bonds into longer-dated, lower-coupon instruments . “In 2016, we had the energy crisis; we had to write off another billion cedis.”

He also cited the banking sector crisis of 2017–2018, when the Bank of Ghana revoked the licenses of several indigenous banks deemed insolvent, and the repeated depreciation of the cedi as factors that have shaped lending decisions. The local currency depreciated sharply in 2024 before appreciating by roughly 40 percent against the US dollar in 2025, according to central bank data .

Asset quality remains a concern. The non-performing loan ratio stood at 18.9 percent in December 2025, down from 21.8 percent a year earlier but still far above the Bank of Ghana’s 10 percent target by the end of 2026 .

Effah stressed that banks must balance their developmental role with fiduciary responsibility to depositors and shareholders. He identified three core criteria that determine whether a business qualifies for financing: the viability of the project itself, the credibility of its promoters, and the quality of the business plan .

The Fidelity founder’s comments echo a longstanding structural challenge in Ghana’s financial sector, where banks have historically favored government securities—viewed as high-yielding and low-risk, at least until the debt restructuring—over lending to a fragmented private sector with limited formal accounting and collateral records.

Effah’s own entrepreneurial history illustrates the difficulty of accessing capital. He recounted returning from London with about £40,000 in savings, transferring his personal vehicle to the company as equity, and borrowing $25,000 from a friend to complete his initial investment. “When you start a business, it’s not even about profitability; it’s about survival,” he said .

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Background: Fidelity Bank and Ghana’s Banking Landscape

Fidelity Bank was established in the mid-1990s as a discount house before evolving into a full commercial bank, part of a wave of indigenous private lenders that emerged across emerging markets—including GTBank in Nigeria and Equity Bank in Kenya—modeled on international banking standards . It is now one of Ghana’s largest banks by assets.

The Ghanaian banking sector has undergone significant consolidation since 2017, when the central bank embarked on a cleanup that resulted in the collapse of several indigenous lenders and the creation of Consolidated Bank Ghana. The Domestic Debt Exchange Programme of 2022 further strained bank balance sheets, with lenders holding roughly a third of the domestic bonds being exchanged . Banks have since rebuilt profitability, but lending appetite has not fully recovered.

Economists and business groups have long argued that Ghana’s small and medium enterprises—which account for the bulk of employment—struggle to produce the documentation, collateral, and governance standards that banks require. The result is a persistent paradox: liquidity in the banking system coexisting with credit constraints for the businesses that need it most.