The President of the Liberia Bankers Association (LBA) and Chief Executive Officer of Bloom Bank Liberia, Olalekan Balogu, has urged the Liberian government and regulatory authorities to take decisive action on the country's persistent non-performing loans (NPLs), warning that unresolved bad debts are stifling credit expansion and limiting economic growth.
Speaking during the reading of the Central Bank of Liberia's (CBL) Monetary Policy Communiqué, Balogu commended the CBL leadership for stabilizing key macroeconomic indicators but emphasized that high liquidity in the banking system is failing to translate into lending. The event was attended by senior government officials, including the Minister of Finance, CBL board members, and executives from commercial banks across Liberia.
"I really want to commend the leadership of the Central Bank. We've seen some of the positive trends in the figures in Liberia. You really have some figures here," Balogu said. He highlighted recent achievements in stabilizing the exchange rate and reducing inflation as major milestones under the current monetary policy framework.
"Most importantly, the stability of the exchange rate in recent times--this is something that is a bit manageable. And also, the inflation rate has really come down," he added.
Keep up with the latest headlines on WhatsApp | LinkedIn
Despite these gains, Balogu sounded a note of caution, describing a troubling paradox in Liberia's banking sector: high liquidity coexisting with declining lending.
"If you look at the trend today, we have over 50 percent liquidity ratio," he said. "Meaning banks have money just locked up either in the vault or doing interbank placements and trading in central bank bills."
He warned that this trend undermines the traditional role of banks as financial intermediaries and could slow economic growth.
"The loan book has dropped, which means that we are not performing our traditional roles--to intermediate in the industry and support economic growth and commerce," Balogu explained. "Banks are being cautious and risk-averse, as it were."
Balogu emphasized that unless the long-standing challenge of NPLs is addressed, the excess liquidity will continue to hamper economic expansion.
"As long as we continue sitting on liquidity, it will have a negative impact on economic growth and development," he said. "It's good that we're liquid, but the whole essence of banking is not to sit on liquidity. It's to use that same liquidity to intervene in the market."
Addressing public criticism that banks are unwilling to lend, Balogu defended the sector.
"When you go to meetings and hear people say banks don't lend, banks don't lend, I'm quick to respond that our trade is money," he said. "Sitting on money is of no value to us."
He also cautioned against repeating past mistakes where credit exposure was concentrated among a few borrowers, noting that such practices could pose systemic risks.
"If we are not careful, we will have a similar experience to the past, where we just credit our loans to very few individuals, and that constitutes its own risk as well," he said. "More still needs to be done in the area of NPL resolution."
Balogu further highlighted Liberia's engagement with the International Monetary Fund (IMF), noting that the country has received commendations for recent improvements.
"We had the IMF meeting sometime last month, and the commendation was very high," he said. "A lot of things have changed now. So thanks to your leadership, and thanks to the management of the Central Bank."
Responding to the concerns, CBL Executive Governor Henry F. Saamoi acknowledged the challenges but pointed to tangible improvements in the banking sector's asset quality.
"We've seen significant improvement," Saamoi said. "The NPL ratio has improved from 19.7 percent at the end of 2024 to 12.587 percent. That is a significant, significant improvement in the NPL ratio in the country."
Saamoi expressed confidence that continued implementation of the CBL's NPL resolution framework could bring the ratio below the 10 percent threshold, widely considered a benchmark for banking sector stability.
"As we continue to implement this NPL resolution framework, we think we can get below the 10 percent threshold," he said, while praising commercial banks for their cooperation.
In a major policy announcement, Saamoi disclosed that the CBL will host a National NPL Conference in 2026 to bring together all critical stakeholders to address the root causes of bad loans.
"I will now announce this publicly," Saamoi said. "In 2026, we are having an NPL conference in Liberia. It's going to involve all of the stakeholders."
He explained that the conference will include the judiciary, legislature, executive, commercial banks, and international partners, aiming to build a shared understanding of structural drivers of NPLs and to craft practical solutions.
"We want them to hear directly from you--the banks--what recommendations you want to make to enhance the entire environment," he said.
The CBL Governor linked high NPL levels to elevated interest rates and limited credit access for small and medium-sized enterprises (SMEs), which he described as Liberia's engine of growth.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
"One of the complaints we hear from the private sector is pricing--high interest rates," Saamoi noted. "But banks have to price risk. If we improve behavior as a country, we'll reduce NPLs, and prices will also come down."
He emphasized that resolving NPLs would enable banks to attract long-term funding and expand lending to the private sector.
"The engine of growth is the private sector," Saamoi said. "Who supports that private sector? It's the commercial banks. If commercial banks are not protected, they cannot move the private sector to growth. When banks are assured that when they lend, they can recover, they will lend more."
Saamoi concluded with a call for collective national action, urging all branches of government to take part in creating a stronger lending environment.
"This will require all of us coming together as a nation--proper suggestions that can be implemented at the judiciary, legislature, and executive levels," he said. "Liberia has a lot of potential, but we must take deliberate action to grow this economy."
He thanked commercial banks and private sector actors for supporting the Central Bank's mandate and expressed optimism that Liberia is "on the right trajectory" toward achieving single-digit NPL ratios and a more growth-oriented banking system.
