…propose reduction in corporate tax to 18%
By Elizabeth PUNSU, Kumasi
The Association of Rural Banks have appealed to government to reduce corporate tax for Rural and Community Banks (RCBs) as a special incentive to ensure the growth of the rural economy and the country at large.
They are proposing a reduction from the existing 30 percent to between 15 and 18 percent. Their request is premised on the numerous interventions by way of corporate social responsibility (CSR) support offered to the communities in which they operate.
According to the association’s national president, Eric Danin, when granted, this tax incentive would help increase support to the underserved communities and ensure better growth of the RCBs.
“We, therefore, humbly propose a revision of the corporate tax specifically to between 15 percent and 18 percent for RCBs as a special incentive to grow the rural economy and, by extension, strengthen Ghana’s economy for up to about 79 percent or more,” he said.
Locked-up funds
Mr. Danin, who was addressing delegates at the 23rd Biennial General Meeting (BGM) of the Association of Rural Banks in Kumasi, also advocated strongly for the release of locked-up funds of member-banks.
According to him, a cross-section of member-banks have huge sums of money locked up by virtue of both the financial sector clean-up embarked upon by the government and the Domestic Debt Exchange Programme (DDEP).
This, he lamented, has negatively impacted the profitability of some of their members, making some banks unable to satisfy investor expectations.
He mentioned that even though the government announced the release of about GH₵1.5billion to address the problem, RCBs were left out of the bail-out package. Mr. Danin, therefore, called on the government to, as a matter of urgency, release these funds to the affected RCBs to cushion their operations and also boost liquidity.
He reassured members that the secretariat will not relent in its efforts to ensure members receive their locked-up funds.
Corporate governance directives
The president expressed concerns over the retroactive application of the corporate governance directive introduced by the Bank of Ghana two years ago. While acknowledging that the directive aims to regulate and ensure sound, effective and efficient banking operations, he noted challenges in its implementation.
He noted that the corporate governance directive, implemented on March 31, 2022, stipulates a maximum twelve-year tenure for Chief Executive Officers (CEOs), with the term starting from April 1, 2022. He argued that any attempt to apply the directive retroactively would violate Article 107 of Ghana’s 1992 Constitution, which prohibits retrospective laws.
“Some of these CEOs were regularly appointed and had the legitimate expectation to work until the compulsory retirement age of 60. If the regulator deems it fit to cap the tenure of CEOs, we embrace it in the spirit of good corporate governance; but certainly we cannot accept any other interpretation of Article 107 of the 1992 Constitution to make it apply from a date long before the implementation of the directive,” he stressed.
Article 107 of Ghana’s Constitution proscribes Parliament from making laws to have retrospective effect; it simply means that no other regulation or policy directive by any constitutional body created under the Constitution shall be made to operate retrospectively.
We, therefore, call on the regulator to respectfully implement the corporate governance directive from April 1, 2022, and not any other date before April 2022 to avoid the unconstitutionality of implementing what is otherwise a very good directive,” Mr. Danin added.
For his part, the Managing Director of ARB Apex Bank, Alex Kwasi Awuah, also in a speech, touted the achievements RCBs have made since the establishment of the first rural bank at Agona Nyakrom in the Central Region in 1976.
Currently, RCBs have over five million active customers with current and savings accounts; and as of the end of June 2024, they held assets that constituted 4.25 percent of the entire assets of the universal banking sector, amounting to GH₵13.75billion. Additionally, the RCBs hold an amount of GH₵11.98billion in total deposits, making them a significant force in the nation’s financial services industry.
Mr. Awuah further stated that the ARB Apex Bank, which is the central bank for RCBs, has been redefining itself as a key business enabler and partner to develop and enhance operations throughout the RCBs over the years.
Through a concession agreement, Mr. Awuah noted that ARB Apex Bank has purchased and provided 15 armoured bullion vans, valued at GH₵40million, to RCBs nationwide in order to improve the security of their assets and the safety of bank employees in specific operations.
A number of the vehicles have been placed with regional offices of ARB Apex Bank to aid specific management for those banks that might not be able to buy their own vans, while other well-endowed RCBs have also received assistance in purchasing their own vans through our concessionary loan facility.
The 23rd Biennial General Meeting and 5th Rural Banking Excellence Awards was held on the theme ‘Building a resilient economy: The role of the rural and community banks’.
