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East Africa Frontline News

NextFrontier Africa is a media platform spotlighting Africa’s emerging opportunities in technology, tourism, aviation, agriculture, health, logistics, real estate, trade, education, and e-commerce.

June 21.2025

2 Minutes Read

Will Ghana's Credit Rating Upgrade Boost Trade and E-Commerce Growth?

Hands holding Ghanaian cedi bills symbolizing Ghana's credit rating upgrade.

A Positive Shift for Ghana's Economy

Fitch Ratings has recently elevated Ghana's long-term foreign-currency issuer default rating to 'B-' from a restricted default, marking a significant milestone in the nation’s economic recovery following turbulent years dominated by fiscal challenges and instability. This upgrade mirrors a previous boost by S&P Global Ratings, which adjusted Ghana's rating to CCC+ in May due to improvements in creditworthiness linked to the nearing completion of a debt overhaul.

Inflation Drops: A Ray of Hope

The positive rating change comes alongside a notable decline in inflation, which decreased to 18.4% in May, down from 21.2% in April. This drop represents the lowest inflation rate since February 2022, inspiring optimism regarding Ghana's economic landscape. David Amuquandoh, a financial expert, emphasizes that this trend could mark a turning point for the Ghanaian economy as it navigates the aftermath of COVID-19 and debt restructuring efforts. He notes that improving inflation rates could enhance the purchasing power of the Ghanaian cedi, providing much-needed relief to consumers and businesses alike.

Challenges Ahead: The High Cost of Capital

Despite these advancements, Ghana's path to recovery remains precarious. The Bank of Ghana is maintaining a benchmark interest rate of 28%, which some critics argue makes borrowing cost-prohibitive for small and medium-sized enterprises (SMEs). As Amuquandoh points out, the high interest rates are discouraging investments, with entrepreneurs facing loan quotes that exceed 30%, prompting many to abandon expansion plans. This caution among domestic and international investors is reflected in Ghana's high public debt, currently estimated at 70.5% of GDP, which continues to deter foreign direct investments.

The Broader Economic Landscape

Moreover, Ghana's heavy reliance on imports exacerbates its vulnerability to global economic shifts, especially fluctuations in oil prices. Industries that depend on foreign inputs—such as pharmaceuticals and electronics—are particularly sensitive to changes in currency and shipping costs. Nevertheless, analysts believe that the current trend of decreasing inflation and stabilizing currency may signal a resilient recovery amidst ongoing uncertainties.

For those involved in trade and commerce, particularly within the framework of the African Continental Free Trade Area (AfCFTA), understanding these developments is vital. As the digital economy and cross-border trade evolve, staying informed about Ghana's economic shifts can guide better business decisions and strategies moving forward.

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Will Ghana's Credit Rating Upgrade Boost Trade and E-Commerce Growth?

A Positive Shift for Ghana's Economy

Inflation Drops: A Ray of Hope

Challenges Ahead: The High Cost of Capital

The Broader Economic Landscape

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