Vice President Dr. Mahamudu Bawumia has urged rural banks in the country to take advantage and make adequate use of the digitisation system being established in the country.
He said the National Identification Card and introduction of the digital addressing system will give unique identities to individuals and also assist in locating every area of the country.
“We have 16.1 billion addresses in Ghana and every five square metres of land in Ghana has a unique address, so we will be able to bring everybody into the formal system,” he emphasised.
He advised the rural banks to put in place operational structures such as efficient credit schemes, effective corporate governance practices, and improved technical, managerial and marketing strategies.
Dr. Bawumia said this at the 6th National Rural Banking Week Celebration on the theme ‘Rural Banking-Key to national industrialisation’, at Kpong in the Lower Manya Krobo Municipality of the Eastern Region
The Vice President indicated that the lifeline of many rural banks in Ghana was the deposits and savings of clients, and therefore taking advantage of the digital system will ensure the needed robust macroeconomic environment to stimulate savings.
Dr. Bawumia said the current government inherited a deficit of 9.4 percent of GDP and a growth of 3.7 percent, and is hopeful that by close of the year Ghana’s GDP will have grown from 3.7 percent to 7.8 percent – with focus on the oil and agricultural sectors.
He said the small and medium-scale rural and urban enterprises are a major concern to government in its attempt to industrialise the economy and accelerate growth.
He said government is determined to expand the Planting for Foods and Jobs programme, increase mechanisation as well as irrigation in addition to improving road networks across many rural parts of the country to enhance agriculture production.
The Vice President said government from next year will begin a major programme of road construction – largely in agricultural areas of the country, where 1,600 kilometres of roads will be put together in the next three years to help boost production.
He acknowledged the fact that passage of the Development Authority bill into law by parliament will set up three major authorities: namely Northern-, Middle-belt and Coastal Development Authorities.
“These development authorities are the vehicles through which we are going to be disbursing US$1million dollars to every constituency every year,” he indicated.
Governor of the Bank of Ghana Dr. Ernest Addison said, as a regulator, its major concern is the low capital level of the rural banks; indicating that as at August 11 this year, only 58 Rural and Community Banks (RCB’s) had a paid-up capital of above GH¢1million.
This changing dynamic in the sector he described as low, and said it does not promote enough factors for effective intermediation, adding: “I can assure you that BoG will be flexible in working with you to strengthen the rural banks”.
Dr. Addison said in order to continue playing a critical role in supporting industrialisation, it is critical for RCBs to adopt strategies to better understand the needs of small enterprises in rural areas.
The National President of the Association of Rural Banks Ghana, Dr. Nana Akowuah Boamah, said currently there are in existence 144 Rural and Community Banks, with over 800 agencies spread mainly in rural communities across the country employing over 20,000 Ghanaians.
Dr. Boamah suggested government and the BoG take a second look at the corporate tax paid by the RCBs, which was increased from 8 percent to 25 percent in 2016, as well as the deadline to meet a new minimum capital requirement of GH¢1million by the end of 2017.
According to Dr. Boamah, if nothing is done about the current requirement, it will drive away potential investors and make share capital mobilisation extremely difficult – especially for RCBs that have not been able to pay dividends to shareholders ever since they were established.
The Konor of Manya Klo Traditional Area, Nene Sakite II, urged RCBs to concentrate on the rural economy and develop products that will serve the informal sector appropriately.
He is of the view that rural industralisation will be attainable when there is ample credit availability for farmers, and affordable interest rates.