…the excellent example of Fiaseman Rural Bank
By Seth KRAMPAH & Joseph AKOSSEY
A couple weeks ago, we discussed how rural banks are leveraging deposit growth for real financial intermediation.
Specifically, we considered how Amenfiman and Nyakrom Rural Bank are leveraging their deposit growth to extend credit to support viable MSMEs.
This article will focus on Fiaseman Rural Bank in the Western Region with its headoffice in Bogoso.
The bank is currently the second largest rural bank in Ghana and has been experiencing robust growth and showing resilience.
Credit and deposit portfolio analysis
Without a doubt, the bank is leveraging its impressive deposit growth to support critical sectors especially Micro, Small and Medium-sized enterprises (MSMEs) in its catchment areas.
The bank posted a total deposit figure of GH₵ 607.8 million in July 2024. The 2023 audited financial statement revealed a total deposit of GH₵ 465.1 million. This implies that there is GH₵142. 1million hike in deposits in seven months.
This figure positions the Babk as the second largest deposit mobilizer in the rural banking industry. This could be attributed to strong customer trust and innovative deposit mobilization strategy.
It recorded a loan portfolio of GH₵ 295.4 million in the same period making it the second largest lender in the rural banking sector in Ghana. The bank’s Loan to Deposit Ratio as of July 2024 was approximately 49%.
This is far higher than the industry average. It is an indication that, the bank is providing real financial intermediation to support economic growth and development. The Board and Management under the dynamic and visionary leadership of Dr Godfred Frank Opoku “believe that success of a bank extends beyond the size of its balance sheet to the positive impact on the livelihood of individuals and prosperity of businesses”.
Indeed, we can unequivocally say that FRB is balancing credit extension with short term investment. This therefore sets it apart from some of its peers that are in favor of short-term investment (Government Treasury Bills).
Prioritizing the MSME sector
As mentioned in the previous article, the MSME sector played a critical role in Ghana’s economy because of its contribution to GDP, employment, revenue generation and others. In view of this, Fiaseman Rural Bank has been prioritizing the MSME sector in terms of credit extension. Critical analysis of the bank loan portfolio as of July 2024 and previous years showed that substantial portion went to the MSMEs. The target segments were small and medium scale farmers, artisans, small and medium scale fish mongers, traders, agro-processing operators, manufacturing sectors and a host of others.
It is worth mentioning that the bank’s financial support has yielded positive outcome because it has enabled most of MSME customers to expand and grow their businesses. This has contributed to job creation.
According to the CEO, Dr Opoku, the MSME sector is the driver of growth of the local economy and hence the need to support it to bridge the financing gap to foster growth and sustainability.
Another evidence about the fact that the bank prioritizes the real sectors especially MSMEs is the establishment of MSME department. This department was established in 2021 and its core mandate is to manage MSME customers to ensure that their needs and wants are satisfied for mutual beneficial relationship.
The department has a robust data base of MSME customers to promote relationship building and also monitor their activities.
Further, it ensures that loan processing and disbursement to this important segment is seamless and real time.
It is significant to note FRB is the only rural bank in Ghana that has established MSME department to prioritize the evolving needs of MSME customers which is a clear demonstration of a proactive approach to support the MSME sector.
Tailor-made loan products for MSMEs
The bank through research and development has developed tailor-made loan products for the MSME customers. One of the products is Asetenapa Susu Loan which is complementary to the Asetenapa Susu. This loan product has helped a lot of susu customers who are predominantly micro and medium size enterprises to scale up their business.
Another loan product is smart loan which is customized loan solution tailored to the unique need of MSMEs in the bank’s catchment area with an outstanding feature of it being collateral free.
We believe it will go a long way to help viable MSME customers who are credit worthy and have the capacity to repay their loans due to strong cash flows but do not have collateral as security to have access to finance to grow their business. The maximum amount a beneficiary can access is GH₵ 150,00.00.
Another unique selling proposition of the smart loan is the fact that it has been digitalized to streamline the application process, making it quick, simple and convenient. For example, smart loan customers can sit at the comfort of their homes and their workplace to apply. The approval and disbursement are quick since turnaround time is key in banking. According to the Marketing Manager, Mr. Francis Bob Kwofie, disbursement of smart loan does not go beyond 48 hours.
It is noteworthy to mention that the smart loan is the brain child of the CEO Dr. Godfred Frank Opoku. After his appointment as CEO of the bank, he recognized the need to empower MSME segment economically through innovative and tailor-made credit product that has the potential to provide superior customer experience.
We commend Dr. Opoku for his vision, innovativeness and insight. It should be pointed out that the smart loan has been a game changer, helping a lot of SMEs in terms of increasing their working capital, asset acquisition, clearing goods among others. The positive cumulative effect is that some customers have been able to grow and expand their businesses. Besides smart loan and susu loans, the bank has fishmongers’ loan, cocoa loan for small and medium scale cocoa farmers and Nnoboa loan for operators of micro businesses.
The fishmongers loan as of July 2024 stood at Ghana GH₵ 43.9million while cocoa loan amount to approximately GH₵ 44 million.
MSME Capacity building
Fiaseman Rural Bank SME capacity building is a key initiative designed to bolster the capabilities and sustainability of micro, small and medium enterprises (MSMEs). This initiative involves organizing workshops and seminars that address critical aspects of business operations such as sound financial management, customer service, loan repayment benefits, business planning among others.
Indeed, this initiative has equipped MSME customers of the bank with the tools and insights to navigate market complexities and drive their business towards greater efficiency and growth. It has also enhanced the bank’s loan quality since customers have realized what is in it for them when they discharge their repayment obligation.
Conclusion
From the forgoing, we can confidently say that Fiaseman Rural Bank is leveraging its impressive deposit growth to support the MSME sector.
We once again congratulate the Board Management led by Dr. Godfred Frank Opoku and the entire staff for their hard work and commitment.
Dr Godfred Frank Opoku, CEO
Leeyoung Akwesi Bukurow, Head of MSME
