The rural banking system is clearly a significant, strategically placed financial institution in Ghana. The Rural Banking networks local knowledge can also be considered as a very important asset to business development and can be leveraged as the financing institutions that Know their customers and the local norms in the areas they are operating better than their competitors.
This important asset of understanding the local people and their concerns can support the government play a key role in developing unique financial products to suit their customers need. This flexibility if adopted properly can no doubt support economic and social development in the targeted areas.
It is evident that the Rural banking sector continue to serves local communities. The rural areas continue to have a significant percentage of the country’s population still residing. However, I believe that the rural banking sector has not been able to reach its full potential and can become the catalyst and engine of growth in the rural communities.
There no doubt that as the governing increases the number of the population that have access to financial Inclusion there is a need for a network of financial inclusion outlets in the rural areas whose role will be to support SME and the financial needs in the rural areas and the Rural Banking network can play a even more critical role in filling this gap to support the growth of the SME in the rural economy.
The rural banking sector can position itself as a special impact asset class , This classification will increase the possibility that the sector become a key partner ensuring that SME requiring financing are aligned with the principles of impact investing.
A number of conscious globally financers are gradually looking at environmental issues as part of their financing requirements and considering the (3P) criteria of ‘People, Profit & Planet’ as part of their financing requirement and encourage SME look at these issues very positively.
The Rural Banking network can position itself to play a critical role in promoting sustainable, ‘green financing’ aligned with the COP 26 objectives. This important positioning will place them in a key place to access some global funding available globally to support SME in their business transformation to be climate neutral and also help address the challenge of climate change and promote financing to become ‘carbon neutral’.
However, this also implies that leaders in this sector have the vision to take ownership of the new agenda. It poses an important question: Is the sector ready to seize the opportunity to promote new ideas?
In every organization, real ‘Vision’ builds on clarity of purpose and conviction about the best course of action. The process starts with analysis of challenges, the changing context and overall objectives. It’s then possible for leaders to decide how best to achieve goals.
The repositioning of the Rural Banking sector’s goal will include the objective to achieve social and economic impact whilst recognizing the wider issues of sustainability and global change.
Some Practical steps will include:
- Developing easily accessible, ‘revolving’ funding to enhance growth and enable the rural banks raise both equity and debt that helps close the financing loop for this important sector.
- Developing new financial products that are responsive to the new criteria and look to achieving real progress in the next 5 years.
This I believe could lead to the Rural banking sector heading towards an attractive pathway. This transformation can be successful if the shareholders and stakeholders within the rural banking sector embrace the ‘positive change’ ideology – and make the necessary changes to their operations.
This change of focus will involve additional training, which can help those leading the sector.
Some Important themes might include:
- Strategic positioning of the sector, e.g. by liaising with the key stakeholders
- Development of new financial products that operate within the impact space
- How best to market the sector as an impact investment class
- Developing laudable exits for shareholders eg the alternative market
The ‘new rules’ involve social responsibility and sustainability – as well as sound judgement relating to financial performance and business criteria. Environmental, Social and Corporate Governance (ESG) is at the heart of the new thinking. KPMG make the point: Businesses not taking ESG seriously are beginning to lose customers, employees and financing; eventually they will become unviable. (ESG Introductory Guide – 2020/08). Board Members must learn how to apply the principles to their business and ensure that leaders have the vision and determination to achieve significant change. In the context of Rural Banking, the process involves the wider strategic position of the sector.
New Financial Products
With the objective of targeting climate change and supporting SMEs located in the rural areas, there is scope for proactive development of new financial products. These products should work towards addressing future challenges and also bridging the employment gap for the youth.
The sector can include some of these broad areas in their product development
- Establishing of financial products for the youth, e.g. to support agribusiness
- Promotion and financing of sustainable businesses in the rural areas
- Encouraging energy initiatives in businesses to embrace a ‘zero net footprint’
- Prioritize new ‘climate favorable’ business proposals / new initiatives
These are areas that will influence business and financing in the future. The rural banking networks are well-positioned to be part of the new thinking that can drive this important agenda. As I have come to believe that
The direction of consciousness and mindfulness is now an unwritten requirement in responsible organizations.
The focus on developing a meaningful, sustainable vision is increasing. It will become very important in the future in classifying organizations and assessing their overall value.
Savvy shareholders will only invest in organizations that are clearly aware of all the risk parameters including those that truly embrace People Profit and Planet – and how best to achieve future growth. The rural banking sector can position itself to work to support the climate change financing initiative – and actively support SMEs that are eager to achieve performance criteria. These impact parameters can also be addressed as part of an organizational goals and overall performance metrics.
JCS Investment will be pleased to work with Rural work with Rural Banks on this transitional path
In conclusion the Rural Banking Network are very strategically placed in Ghana and can also be expanded to other areas if they can embrace change to modify certain aspects of their structure and their operation. This will no doubt pivot them to be the financing Institute of choice to doing business with in the areas they are located.
This transformation is very important as
A number of key industries are all located in the rural areas
Agriculture continues to employ significant number of people
The author is the CEO of JCS Investments LTD. She has 20 years’ experience in operating as an impact Investor in Ghana
