The purpose of this paper is to examine the relationship between governmental institutions and the macroeconomic environment, with a focus on the nonperforming loan (NPL) ratio in Sub-Saharan African (SSA) countries. The study employs dynamic panel data analysis covering 30 countries in the region over the period from 2010 to 2021. The findings suggest that the growth rate of GDP per capita is consistently associated with a reduction in the NPL ratio. On the other hand, domestic credit expansion is significantly linked to an increase in NPLs. Moreover, the study shows that the economic index, institutional quality index, political index, and aggregate governance indicator all have a negative and statistically significant impact on the NPL ratio, indicating that these aspects of governance institutions contribute to reducing NPL levels. The study also examines the combined effect of GDP per capita growth and the four facets of governance institutions and finds that the interaction terms between them are significant. This implies that the impact of the macroeconomic indicators on the NPL ratio is determined by the quality of the governmental institutions. The research highlights the importance of effective governmental institutions in ensuring a stable macroeconomic environment and reducing NPL levels. The findings of this study could be valuable to policymakers and financial institutions, as they provide insights into the factors that contribute to NPLs and suggest potential strategies for reducing them.