RURAL BANKS MUST ENCOURAGE SAVINGS (NOV 10, PAGE 20)

THE hitherto lack of culture of savings among the rural communities prompted the development of rural banks in the country to solve this problem and bring the rural people on board the banking system.
This was a problem to the overnment since people living in the rural communities who are mostly farmers, kept their monies in their rooms and as such, the monies were either stolen or destroyed, whenever there was fire outbreak in their houses.
The establishment of rural banking system in the country started in 1976 through the initiative of the Bank of Ghana (BoG), with the Nyakrom Rural Bank in the Central Region as its first. Over a period of time, a number of rural banks were established all of which came together to form the Association of Rural Banks in 1981.
The withdrawal of the BoG’s technical banking services from the Rural and Community Banks (RCBs) in 1994, necessitated the commissioning of SGV Consultants to study the situation and make recommendations.
Upon subsequent feasibility studies and recommendations by Messrs J.S. Addo Consultants, the ARB Apex Bank Limited was established and commenced operations on July 2, 2002.
The bank provides the Rural and Community Banks with technical, managerial and financial support services.
Today, the RCBs constitute the largest banking network with about 127 banks and over 560 banking offices throughout the country.
Many rural banks were established in the initial stages, but some of them could not survive as a result of liquidation problem, making them to be declared distressed.
The banks are to mobilise funds from the rural communities and also cultivate the culture of savings among the rural people.
It is further envisaged that the rural banks would plough back part of their profits accrued from their banking activities to assist the towns and villages in their operational areas.
Since their inception, the rural banks have contributed meaningfully towards the development of the communities in their catchment areas, particularly in education.
The banks have granted loans and advances to their respective shareholders, as well as their customers to start or expand their business activities such as farming, trading, cottage industry and transport.
This has gone a long way to improve the living conditions of most of the people in the rural communities in the country.
Through the adoption of prudent and efficient policies, the banks have been able to stay in business to contribute effectively to the socio-economic development of the rural communities in particular, and the country as a whole.
The Fiaseman Rural Bank Limited at Bogoso in the Prestea-Huni Valley District in the Western Region, is one of such banks to have braced all odds over 21 years of its existence to survive and contribute to the socio-economic transformation of its immediate communities and the country at large.
Last year, the bank granted loans and advances totalling GH¢1,726,574 to its customers, as against GH¢1,378,873 granted in 2007, representing an increase of 25.2 per cent.
Out of the amount, GH¢178,774 went into agriculture, while GH¢15,542 went into cottage industry, with GH¢347,031 going into trading.
A total of GH¢2,587 went into the transport sector, while GH¢1,182,640 went into other commercial activities.
The bank proposed an amount of GH¢44,275.44 to be paid as dividend for 2008 even though the bank posted a pre-tax profit of GH¢187,009 in 2008, as against the 2007 profit of GH¢202,359.18.
The proposed dividend formed 27 per cent of the after tax profit for 2008.
Total loans granted under the microfinance scheme by the bank in 2008, amounted to GH¢555,752, as against the 2007 figure of GH¢369,842, representing 50 per cent increase.
Beneficiaries of the loan facility were often traders, street vendors, service providers and artisans who operated micro enterprises in the bank’s catchment area.
The Chairman of the Board of Directors of the Fiaseman Rural Bank Limited, Osagyefo Amanfo Edu, announced these at the 21st annual general meeting of shareholders of the bank at Bogoso.
He said the total deposit grew from GH¢2,701, 239.37 in 2007, to GH¢3458,434.80 in 2008, representing a percentage growth of 28 per cent.
Osagyefo Edu attributed the bank’s achievements to aggressive deposit mobilisation drive.He said the shareholders’ funds grew from GH¢653,717 in 2007, to GH¢780,024 in 2008, showing a growth of 16.2 per cent.
Osagyefo Edu said the Apex Link Domestic Money Transfer product was highly patronised during the year under review, adding that a total of GH¢749,606 was transferred through that transfer medium of the bank to the various beneficiaries.
He said the Western Union Money Transfer was introduced to the bank in May, 2008 and as of December 31, 2008, GH¢51,993.78 had been paid to various clients by the bank.
Osagyefo Edu stated that the bank spent GH¢3,900 on its corporate social responsibilities, saying, “In the ensuing year, we programme to use a percentage of post tax profit on social responsibility with much emphasis on education”.
In an address read on behalf of the Managing Director of the ARB Apex Bank Limited, Mr Eric Osei-Bonsu, he stated that diversification of products and creation of niche markets were important to reduce risk and to take new opportunities.
He said by niche markets, he meant the creation of products that would enter the minds and capture the attention of people whose loyalty towards the product could be assured.
He said rural and community banks within a particular catchment area, could team-up to develop that kind of product to strengthen the niche market so that the benefits could be shared.
Mr Osei-Bonsu advised the rural banks to develop a marketing strategy that would reach where the clients were stationed and speak their language.
He said the banks should be able to research into what financial services were being offered by competitors in and around their geographical area of operation.
That, Mr Osei-Bonsu said, would help them adopt their own competitive strategies for differentiation and positioning of their services.
“Research has shown that micro finance institutions, including rural banks, pay little attention to promotion of products and services because they are deemed expensive,” he said.
He added, “But you must now consider creating or strengthening your marketing departments to ensure revenue growth, customer satisfaction and financial sustainability”.
That, the managing director explained, was because marketing was the core of the forces that drove businesses and profits.