A PAPER ON THE EXPERIENCE, ACHIEVEMENT AND THE WAY FORWARD OF RURAL BANKS IN GHANA PRESENTED BY

1. A PAPER ON THE EXPERIENCE, ACHIEVEMENT AND THE WAY FORWARD OF RURAL BANKS IN GHANA PRESENTED BY EMMANUEL K. KWAPONG MANAGING DIRECTOR ARB APEX BANK LTD

2. HISTORY OF RURAL BANKING IN GHANA •  ROLE AND ACHIEVEMENTS • PROBLEMS OF RURAL BANKS • THE WAY FORWARD - PROGRAMMES PUT IN PLACE TO STRENGTHEN RURAL BANKING IN GHANA

3. History of Rural Banking in Ghana • The search for a system to tackle the financial problems/needs of small-scale rural dwellers • The bigger commercial banks could not accommodate the financial intermediation problem of the rural poor. • The first rural bank, Nyakrom Rural Bank Limited, was opened in 1976.

4. The rate of growth of rural banks over the years is recorded as follows:

5. A RURAL BANK • UNIT BANK • LOCALLY PROMOTED & OWNED • INCORPORATED UNDER THE COMPANIES CODE OF GHANA • LICENSED UNDER BANKING LAW • BOARD OF DIRECTORS ELECTED BY SHAREHOLDERS

6. THE ROLE AND ACHIEVEMENTS OF THE RURAL BANKS • They mobilize resources from their catchment areas and lend them to deserving applicants in these areas. • They help to enhance businesses in the rural communities by helping them improve upon their various activities through the delivery of banking services. • Promotion of rural banks in cocoa growing areas to assist in the purchase of cocoa through the Akuafo Cheques System.

7. Rural banks have been making significant contribution to the development of their catchment areas by contributing to the construction of schools, health centres, provision of electricity, pipe-borne water and awarding of scholarships to needy but brilliant students. • They help to inculcate banking culture among people in the catchment areas of rural banks.

8. PROBLEMS OF RURAL BANKS • Weak management as a result of inability to attract qualified and suitable personnel. • Small customer-base as a result of limited business opportunities. • Non-membership of the National Bankers’ Clearing House resulting in delays in cheque clearing through the big commercial Banks.

9. Poor technology and communication facilities to promote modern banking operations. • Inadequate capitalisation thus, limiting their ability to operate at optimum level. • Inadequate bookkeeping, non-observance of internal control measures and lack of regular auditing. • Social problems such as chieftaincy disputes in some communities adversely hinder the development of some Rural Banks.

10. THE WAY FORWARD • RURAL FINANCIAL SERVICES PROJECT (RFSP) • The RFSP seeks to promote growth and reduce poverty in Ghana by broadening and deepening financial intermediation in rural areas through the following measures:- • Strengthening operational linkages between informal and semi-formal micro-finance institutions and the formal network of rural/community banks in order to expand services to a large number of rural clients.

11. Building the capacity of the rural/community banks, the principal formal financial intermediaries operating in rural areas in order to enhance their effectiveness and the quality of services they provide. • Strengthening the institutional and policy framework for improved oversight of the rural finance sector.

12. Supporting the establishment of an Apex structure for the rural banking system to provide the economies of scale needed for these unit banks to address generic constraints.

13. ESTABLISHMENT OF THE APEX BANK • The establishment of the ARB Apex Bank is a component under the Rural Financial Services Project. It commenced business on 2nd July 2002.

14. MISSION OF THE APEX BANK • To provide banking and non-banking support services to the rural and community banks with the aim of improving their operational efficiency and thereby transforming them into efficient financial institutions which can effectively address the banking needs of communities in which they operate.

15. FUNCTIONS OF THE APEX BANK The Apex Bank is a mini Central Bank for the rural and community banks (RCBs) under the supervision of the Bank of Ghana. The key functions are:- • Maintenance of accounts and funds management for the RCBs.

16. Provision of cheque clearing services

17. Provision of cash movement services. • Development of financial products. Below is a summary of transfers made since the product was launched:

18. Computerisation of the RCBs. • Provision of inspection/audit services. • Sourcing of funds for on-lending to RCBs.

19. Training of Staff and Directors of RCBs - First Stage(Referred to as Foundation Stage) - Customer Care - Business Communication - Accounting - Lending - Cashiering - Insight into Banking

20. Second Stage(Referred to as Advanced Stage) • Public Relations and Marketing • Customer Relations Management • Internal Control • Cost and Interest Calculations • Management Information • Loan Delinquency Management • Micro-finance Best Practices • Legal Aspects of Banking • Team Development • Leadership Training • Prudential Returns

21. Third Stage(Referred to as Senior Management) • Product Development • Bank Policy and Strategies • Asset and Liability Management • Liquidity Management • Change Management • Human Resource Management • Prudential Returns • Corporate Planning / Budgeting

22. Fourth Stage(Directorship) • Code of Conduct • Corporate / Strategic Planning • Governance • Leadership • Prudential Returns • Policy Formulation Principles & Process • Board Room Procedure

23. OTHER ACTIVITIES • Microfinance Programmes • Opening of Apex Bank Branches • Image-Building

24. CONCLUSION • In conclusion, I would like to say that rural banking in Ghana has undergone a tremendous change and steadily progressing.

25. PERFORMANCE ANALYSIS OF RURAL BANKS- FINANCIAL INDICATORS

26. CLASSIFICATION OF RCBS BASED ON CAPITAL ADEQUACY RATIO (CAR)PER BANK OF GHANA EXAMINATION REPORT

27. - OUTREACH

28. - MARKET SHARE OF RCBS IN BANKING INDUSTRY

29. Thank you for your attention and God bless us all.