Rural banking today after 40 years

BY: Joseph Akossey
Rural banking today  after 40 years
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 networks spread across the 10 regions of the country.

The current number of rural banks and their branches help us appreciate the fact that the industry which started with small players has experienced impressive growth and continues to grow in branches and customer base 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.

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 lacked electricity and potable 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 the 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 organisations.

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 those in the universal banks.

In most rural banks today, the minimum qualification to secure employment is HND qualification.

Most 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.

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 did not have qualified and experienced people forming the board.

This no doubt had an 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 a 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 have impressive academic and professional qualifications.

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

The use of technology

The manual system of banking was also a major problem faced by rural banks in the past.

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The manual system of banking had adverse effects 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 heartwarming to say that rural banking today is computerised and, therefore, most of the problems associated with the manual system of banking have been overcome.

The Ghana Rural Banks Computerisation 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 channels to deliver convenient service to customers.

Some RCBs have also introduced mobile apps to ensure that customers have uninterrupted service delivery.

A notable example is the Nwabiagya Rural Bank in the Ashanti Region.

Improvement in service quality

In the past, most rural banks had problems with 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 a customer-centric culture at the ARB Apex Bank, as well as in the rural banking industry.

Growth in Branch Network

Most rural banks started very small with a few staff in a rented building. However, currently, the clear 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, the Amenfiman Rural Bank has a staff strength nearly 400.

Improved liquidity and profitability

Currently, scores of RCBs have improved very well in terms of profitability and liquidity.

This implies that existing and prospective customers can have trust and confidence in rural banks.

I would like to take this opportunity to urge the public not to feel apprehensive about transacting business with rural banks.

Depositors’ funds are safe and secure because the sector is resilient and robust.

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 June 30, 2018, the rural banking industry total assets were GH¢3,800.67 billion.

The total deposits of the industry also amounted to 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. — GB

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

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