Rural banking and rural development in Ghana A case study of selected rural Banks in the Ashanti Region

The Government of Ghana through the Bank of Ghana introduced and established Rural Banks in 1976 as one of the strategies to facilitate the development of rural communities. Aside inculcating the habit of banking in the rural dwellers, the Rural Banks were to mobilize funds and channel them to productive ventures in the rural areas. The rural banking sub sector has become a growing and a vibrant part of the whole banking industry and the Ghanaian economy as a whole. Aside the disbursement of credit facilities which has helped in improving the living conditions of the beneficiaries, the Rural Banks have also, created employment and has helped in inculcating the habit of banking in the dwellers of the rural communities to some extent. This study sought to examine the extent to which the Rural Banks have been able to help in facilitating the expansion and development of the rural communities through the mobilization of funds and the provision of credit facilities to these communities. The study also examined the perception of the rural dwellers on the role of Rural Banks as facilitators of Rural Development. Using the Ashanti Region as a case study, there was the sampling of seven Rural Banks and ninety - five rural dwellers from seven rural communities where agencies of the selected banks are located. The ninety - five rural dwellers were chosen and interviewed purposively from rural ventures like farming, cottage industry and petty traders. The views of Opinion leaders were also collated through the use of focus group discussions. The data acquired from the interviews were analyzed the quantitative and qualitative techniques. Other sources of data were basically secondary specifically from books, journals as well as other relevant publications and reports. The study revealed that, the orientation of the Rural Banks as development agents is gradually fading out as they have all adopted a more commercial outlook. Aside the fact that they are helping in inculcating the habit of banking in the rural dwellers, their products and services are more skewed towards the urban and peri - urban areas as two thirds of their branches are located at such areas. The study revealed that, the extent to which the banks are able to assist the communities in the provision of infrastructure depended on their financial strength. iv The study also brought to the fore the fact that, although the Rural Banks are helping in the provision of some social infrastructure, credit is still a problem for most rural dwellers due to the nature of security required by the Rural Banks; a significant proportion of the stakeholders in the cottage industry and community members were therefore of the opinion that the role of the Rural Banks as agents of Rural Development is yet to be fully realized. In conclusion, the inability of the Rural Banks to live up to the purpose of their creation is due to the challenges they are facing. The challenges emanate from factors that are both internal and external. It is recommended that externally, macroeconomic and monetary policies that create the enabling environment for the rural banking industry to perform should be pursued by the state whiles internally efforts should be made by the Rural Banks to put in place the right policies that will facilitate high performance. This is because the Rural Banks still have the potential to help in improving the rural communities as facilitators of Rural Development.

Source: KNUST