Rural banking today, after 40 years

More than 40 years have elapsed since the birth of rural banking in Ghana. After the establishment of the first rural bank in 1976 at Agona Nyakrom in the Central region, other rural banks were established with a view to providing financial intermediation especially in the rural communities of Ghana.

According to the Efficiency Monitoring Unit (EMU) of ARB Apex Bank Report for the second quarter of 2018, there were over 140 rural and community banks with over 700 branch network spread across the ten regions of the country. The current number of rural banks and their branches help us to appreciate the fact that the industry which started with small players has experience impressive growth and continue to grow in branches and customer base so as to drive financial inclusion in rural and urban areas of Ghana.

Over the years, rural banks have contributed immeasurably to rural social economic development. The rural banking industry as we see today has improved as compared to the past 40 years. This article will highlight some problems faced by the industry in the past and the dramatic improvements in recent years.

  1. Improvement in the quality of staff

Poor staffing was a major problem faced by the industry in the past.  In those days; most rural banks were cited in the rural areas which lack electricity and portable water supply. In view of this, qualified and experienced potential employees were reluctant to accept appointment to work with rural banks. Moreover, in the early part of rural banking, remuneration of an average rural bank staff was far below that of his counterpart in a universal bank. This was because rural banks were relatively young. Another factor that contributed to staffing problem was the fact that in the initial stage of rural banking, there was limited supply of graduates in relation to demand. The limited graduates opted to work with the multinational organizations. This therefore made it difficult for rural banks to recruit university graduates.  (Rural Banking in Ghana by Mr. Asiedu Mante)

It is worth mentioning that the problem of poor staffing in rural banking has improved of late. The rural banking industry can now boast of qualified and experienced staff like the universal banks. In most rural banks today, the minimum qualification to secure employment is HND qualification. The vast majority of personnel who work in rural banks have first degree and Master`s degree qualifications. It is common to see holders of first degree qualifications working as Tellers in rural banks.

Apart from academic qualifications, there are several employees in the rural banking industry, who are chartered accountants and bankers. It is worth mentioning that a few CEOs of RCBs hold PhD. A notable example is Dr. Alexander Asmah, the CEO of Amenfiman Rural Bank. It is more gratifying to say that some RCBs have come to appreciate the fact that in services marketing such as banking, the right people are valuable assets. Hence, they have position themselves to compete for talent market share and also be the preferred employer in the industry.

  1. High quality board composition

Another problem that rural banks were grappling with in the past was the quality of board members.

Most rural banks back then were not having qualified and experienced people forming the board. This no doubt had adverse effect on the performance of rural banks. This is because board of directors of rural banks formulate policies, take strategic decisions among others. Hence, the calibre of board of directors has bearing on the performance of a rural bank. Let me point out the fact that there is much improvement when it comes to the quality of board of directors in the rural banking industry today. Most rural banks today can boast of directors who are competent and experienced and also have impressive academic and professional qualifications.

A number of rural banks today have the right skill mix of accountants, bankers, lawyers, economists among others serving on their board.

For example, Atwima Kwanwoma rural bank in Ashanti Region has on its board. Mr. Anthony Darboh who is a seasoned banker with the following qualifications: BBA, MBA ACIB. CA (GH) among others.

Similarly, Asante Akyem Rural bank has on its board Dr. Philip Yaw Amakye who is also an astute banker with the following qualifications:

BSC (Hons) in Economics and Business and Finance, MSC in Finance and investment from London South Bank University (UK), PhD in Financial Management, Doctor of Business Administration (DBA), Graduate Diploma in Management among others.

  1. The use of technology

Manual system of banking was also a major problem faced by rural banks in the past. The manual system of banking had adverse effect on service quality because the turnaround time for service delivery was long.

The manual operations also translated into inaccuracies in record keeping, late preparation and submission of prudential returns to the Central Bank and ARB Apex Bank. (Rural Banking in Ghana by Mr. Asiedu Mante) It is heart-warming to say that rural banking today is computerized and therefore most of the problems associated with manual system of banking have been overcome. The Ghana rural banks computerization and interconnectivity project (GRBCP) was financed by the United States of America through Millennium Challenge Account and was managed by the Millennium Development Authority.

Currently, scores of rural banks have deployed Automatic Teller Machines (ATMs) as additional channel to deliver convenient service to customers. Some RCB have also introduced mobile app to ensure that customers have 7/24hr service delivery. A notable example is Nwabiagya Rural Bank in Ashanti Region.

  1. Improvement in service quality

In the past, most rural banks had problem with regard to service quality delivery. These rural banks were enjoying monopoly in their catchment areas. This was because the universal banks and other financial institutions thought that the catchment areas of rural banks were not attractive to establish their presence.

In view of the absence of competition, most rural banks overlooked the need to offer superior service quality. However, at present, rural banks are facing intense competition from universal banks savings and loans companies, co-operative credit unions, microfinance companies, susu collectors among others. Aside from the competition, bank customers have become sophisticated, demanding and promiscuous. These factors and many others have compelled several rural banks to appreciate the need to improve on service quality.

It is worth mentioning that, the MD of ARB Apex Bank Mr. Kojo Mattah and his team are working assiduously to promote customer centric culture in ARB Apex Bank as well as the rural banking industry. This will no doubt ensure that high service quality is prioritized. No wonder the theme for the recent General Managers/CEOs Conference held at Ho in the Volta Region was Rendering Service with Passion: A Panacea for Competitive Advantage

  1. Growth in Branch Network.

Most rural banks started very small with a few staff in a rented building. However, currently, the vast majority of rural banks have three or more branches and have their own premises for their banking operations. Most RCBs have also experienced growth in terms of number of employees. For example, Amenfiman Rural Bank has staff strength nearly 400.

Consider the branch network of the following Rural Banks;

Name of RCB                          Number of branch network

Ahantaman                               19

Amenfiman                               17

Upper Amenfi                          16

Lower Pra                                 16

Fiaseman                                   12

Juaben                                       11

Atwimakwanwoma                  9

Nwabiagya                               9

Kaseeman                                 9

Ahafo Ano Premier                  8

Amanano                                  6

Suma                                         8

Nafana                                      5

  1. Improved liquidity and profitability

Currently, scores of RCBs have improved very well in terms of profitability and liquidity. This implies that existing and prospecting customers can have trust and confidence in rural banks. I would like to take this opportunity to urge the general public not to feel apprehensive about transacting business with rural banks. Your funds are safe and secure because the sector as a whole is resilient and robust. According to the Efficiency Monitoring Unit of ARB Apex Bank Report for the 2nd quarter of 2018, the capital adequacy ratio of the rural banking industry was 18.39%. This figure is higher than the regulatory benchmark of 10%.

Here are examples of some RCBs and their financial performance for 2017.

Name of RCB                          Profit before tax for 2017

Atwima Kwanwoma                GH¢ 8,296,648

Amenfiman                               GH¢ 8,225,821

Fiaseman                                   GH¢ 5,457,966

Nwabiagya                               GH¢ 4,706,149

South Akim                              GH¢ 3,280,345

Juaben                                       GH¢ 3,204,140

Manya Krobo                           GH¢ 3,139,271

  1. Improvement in Industry performance

Rural banking industry performance in terms of total assets, deposits and net worth have improved today as compared to some decades ago. For example, as of 30th June 2018, the rural banking industry total assets were GH¢ 3,800.67 billion. The total deposits of the industry also amounted GH¢ 3,024.43 billion and net worth was GH¢ 500.39 billion. (Source: E M U 2nd Quarter Report of 2018).


In our discussion about rural banking today after 40 years, we have come to appreciate the fact that the sector has made giant strides in terms of technology, quality of board and staff, growth in branch network size among others.

Nevertheless, players in the industry should not be content with the present achievements but should rather continue to make improvement in the areas discussed because there is room for improvement.

The Author is the Head of Proven Trusted Solutions, an employee training and development and marketing research firm.

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