Joseph Akossey’s thoughts ….44 years of rural banking the socio-economic impact


On 9th July, 1976, the Rural Banking subsector of Ghana’s financial sector was born with the establishment of Nyakrom Rural Bank in the Central Region. This implies that the sector has been in operation for 44 years.

According to data from the ARB Apex Bank Limited, presently, there are 144 RCBs with over 800 branch network spread across the 16 regions of Ghana. It is significant to note that, the core objective of introducing the Rural Banking concept was to promote rural financial intermediation. In other words, Rural Banks were to make institutional credit and other financial services easily available to the local communities under relatively less intimidating conditions than the traditional banks. Prior to the establishment of Rural Banks in the rural areas, many rural folks were depending on money lenders who exploited them by charging very high interest rates on loans.

Again, some farmers in the rural areas had their cocoa farms mortgaged to money lenders for period ranging from 10 to thirty years (Rural Banking in Ghana by Mr. Emmanuel Asiedu Mante)

It has also been noted that before the establishment of Rural Banks, some traditional banks which were operating in the rural areas demanded for collateral such as landed property and other assets to secure loans. However, it was difficult for people in the rural communities to meet the strict collateral requirement and thus denying them of access to institutional credit. In addition, some residents in many rural communities were compelled to travel long distances to receive payments such as salary, pension, and cash cheque payment due to lack of access to banks. The above mentioned reasons and others motivated the introduction of Rural Banking.

Rural Banks are owned and operated by people in the local communities. They are therefore community banks and not sole proprietorship businesses. In order to ensure that Rural Banks are community owned, there is a cap on individual, group and institution shareholding. According to Mr. Asiedu Mante, this arrangement was to avoid a situation where an individual or organization would buy the bulk of shares and thereby assume complete ownership and control of a Rural Bank.

Even though it is not widely known by most people, it is indisputable that Rural Banks have played a pivotal role in promoting socio-economic development in rural Ghana.

This article will therefore consider the socio-economic impact of Rural Banks over the years.

  1. Job Creation

Job creation is very crucial in every economy because it helps to reduce the high rate of unemployment and its associated problems.

Moreover, when people are employed, it affords them the opportunity to contribute their quota to economic growth. More importantly employment serves as a source of livelihood and self-identity.

Rural Banks in Ghana have provided employment for sizeable number of people thereby helping them to take care of themselves and their dependents and also pay tax to the government. It has been observed that Rural Banks have employed people as General Managers, Credit Officers, Branch Managers, Tellers, Customer Service Officers, Human Resource Managers, Mobile Bankers and others.

Consider the following RCBs and their contributions to job creation.

Name of Rural Bank                                                               Number of Staff

Ahantaman Rural Bank…………………………………………………………….322

Amenfiman Rural Bank……………………………………………………………412 + 80 outsourced staff

Atwima Kwanwoma Rural Bank……………………………………………….245

Odotobri Rural Bank……………………………………………….371 -including sales executives

Otuasekan Rural Bank……………………………………………………………..235

Kaaseman Rural Bank………………………………………………………………235

Fiaseman Rural Bank……………………………………………………………….343

Bosomtwe Rural Bank……………………………………………………………..284


  1. Response to COVID-19

The COVID-19 pandemic has led to massive disruption of economic and social activities around the globe and Ghana is of no exception.

The Government and the Bank of Ghana have introduced several measures to mitigate the negative effects of COVID-19 on households, individuals, businesses and banks.

Rural Banks have also responded positively to the fight against the pandemic. How? Several Rural Banks have announced relief measures such as reduction in lending rates, moratoriums on loan repayments, loan restructuring among others to cushion customers against the devastating impact of COVID-19.

In addition, some Rural Banks across the country have donated personal protective equipment (PPEs) and other medical supplies to health facilities and other institutions in their catchment areas with a view to supporting them to fight the spread of the virus.

For example, to improve water supply, sanitation and hygiene as part of the COVID-19 response. Amenfiman Rural Bank recently constructed mechanized boreholes for eight communities in the Amenfi East and West District. The total cost of the project amounted to GH₵ 320,000. In fact, the water project has benefited the residents in the eight communities in a significant way because they can now have access to clean water to wash their hands regularly as a precautionary measure against contracting the COVID-19.

Consider other examples;

Name of Rural Bank                                    Cost of donated PPEs and

Other medical supplies

Amenfiman Rural Bank                                  GH₵ 70,825.00

Ahantaman Rural Bank                                  GH₵ 37,500.00

Mumuadu Rural Bank                                    GH₵ 50,000.00

Odotobri Rural Bank                                      GH¢ 30,000.00

Adansi Rural Bank                                         GH₵ 25,000.00

Western Region Chapter (WERBA)              GH₵ 10,000.00



  1. Commitment to rural community development

Unlike the Universal Banks, Rural Banks are constraint by a host of factors such as over-dependence on interest income, limited scope of banking activities, low levels of economic activities in some branch locations, being smaller in size and balance sheet. The above mentioned factors limit the RCBs ability to generate more income.

Notwithstanding the limitations, the majority of RCBs have been making significant contributions to development of communities in their catchment areas as part of their corporate social responsibility.

Consider a few examples:

Atwima Kwanwoma Rural Bank in the Ashanti Region has constructed a Senior High School (Atwima Kwanwoma Presby Senior High) for Pakyi Number 2 community.

The bank makes a cash donation of GH₵ 10,000 every year to support the school. In addition to the cash donation, the bank has been supporting the school with study materials and other logistics. It is noteworthy to mention that school enrolment in the community has increased.

Adansi Rural Bank Limited in Ashanti Region is also at the forefront of making contribution to community development in the bank catchment areas since its establishment in 1980.

In 2019, the bank provided 10 seater water closet toilet facility for the people of Donyina, a community in Kumasi. This has no doubt improved community hygiene and sanitation as well as contributing towards achievement of SDG goal six.

The Board and Management of Amenfiman Rural Bank led by the Chief Executive Officer, Dr. Alexander Asmah believe that a strong brand should be a good corporate citizen through investment in community development. They also have the conviction that a community based financial institution should give back to residents in the locality. In this regard, the bank has been using a substantial part of its profits to invest in developmental projects such as education, security, health, water and sanitation among others. In 2019, the bank constructed and handed over a 14 seater water closet facility to the Asankragwa Senior High School at Asankragwa in the Amenfi West Municipality in the Western Region. This facility brought a relief in the Management of the school after many years without a decent sanitation structure. It is remarkable and refreshing to note that from January, 2020 to date, the bank has invested a little over GH₵ 201,000.00 on CSR projects in its catchment areas. It is of no exaggeration to say that what Amenfiman Rural Bank has done with respect to CSR are too numerous to recount in this article.

Odotobri Rural Bank built the Nana Adu Darko Community Centre at Jacobu where events are held and also built and furnished a Science resource centre at Jacobu Senior High and Technical School also at Jacobu.

  1. Women Empowerment

Many Rural Banks have empowered women in their catchment areas economically and socially. How? They have designed a microfinance scheme that target women that engaged in income generating activities. Through this scheme, women particularly those in rural areas are able to access flexible credit to invest in income generating activities. This has empowered them economically because they are able to generate income to support their family upkeep, invest in their children education and expand their businesses among others.

In addition, the scheme has contributed to reduction in poverty among women in rural areas where Rural Banks operate. The resultant effect is the fact that such women can now take their destiny into their own hands. Further, the scheme has empowered several women socially because as part of the group methodology they are trained on how to speak in public and interact with others in the group. For example, over the years, Adansi Rural Bank has used its microfinance scheme to empower women in the bank catchment area economically and socially. The bank microfinance loan disbursement for 2019 amounted to GH₵ 12.5 million.

Nafana Rural Bank in the Bono region has also used microfinance scheme to empower many women in the bank catchment area. According to the General Manager, Mr. Samuel Sie, the scheme is a tool to transform the lives of vulnerable women in rural areas.


  1. Promoting Financial Inclusion

According to the World Bank, financial inclusion is a key enabler to ending poverty and boosting prosperity.

In view of the importance if financial inclusion, the government of Ghana through the ministry of finance has launched the national financial inclusion and development strategy to accelerate financial inclusion.

Throughout the years, Rural Banks have deepened and continue to deepen financial inclusion in Ghana. This has made it feasible for the marginalized, the unserved, the underserved, the unreachable, the vulnerable, and the rural poor and micro-business operators segments of the population to have access to formal financial services.

According to data from the ARB Apex Bank Limited, the customer base of the Rural Banking sector is over 6.5 million. The figure is higher than the combined customers of the 23 universal banks. This really shows that Rural Banks have significantly contributed to the government financial inclusion agenda. It is heartwarming to mention that petty traders can access credit as little as GHC 500.00 from a Rural Bank. The universal banks might not handle this customer because the value of the transaction might deem to be unprofitable.

In similar vein, a Susu customer of a Rural Bank can contribute as little as GHC2.00 to the Susu scheme with a view to raising working capital.

The above mentioned examples demonstrate the fact that RCBs have contributed to addressing the credit constraint of the vulnerable

According to the Bank of Ghana , Annual Report for 2019, the Rural Banking sector recorded total assets of GHC 4.69 billion as at end-December 2019reflecting as increase of GHC550 million over the end of December, 2018 position.

The Efficiency Monitoring Unit of the ARB Apex Bank Report for December 2019 indicated that the sector reported a loan portfolio of GHC1, 609 billion while total deposit amounted to GHC3, 877 billion.

The above mentioned statistics also show that the RCBs sector is deepening financial inclusion in Ghana especially in the rural areas. 


Considering the crucial role Rural Banks play, the government and the Bank of Ghana should support them to remain resilient, robust and strong. In this way, they will be well-positioned to better support rural economic development. Again, the sector should matters to the government and policy makers as it is the largest provider of financial services in rural areas.


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