Rural Banking : The Case of Rural and Community Banks in Ghana
This case study describes the history and business model of the Rural and Community Bank (RCB) network in Ghana, analyzes its performance, identifies key issues, and makes recommendations on the way forward. The study analyzes the service delivery...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/288531468006608213/Rural-banking-the-case-of-rural-and-community-banks-in-Ghana http://hdl.handle.net/10986/27725 |
| Summary: | This case study describes the history
and business model of the Rural and Community Bank (RCB)
network in Ghana, analyzes its performance, identifies key
issues, and makes recommendations on the way forward. The
study analyzes the service delivery and financial
performance of the RCBs. Before the establishment of RCBs in
the late 1970s and the subsequent expansion of other service
providers into rural areas, access to institutional credit
for farm and nonfarm activities was scarce. The main sources
of credit were moneylenders and traders that charged very
high interest rates. In many rural communities, secure,
safe, and convenient savings and payment facilities hardly
existed. The first RCB was established in a farming
community in the central region of Ghana in 1976. Rural
communities showed tremendous interested in the community
ownership and management features of RCBs, and by 1984 the
number of RCBs reached 106. The introduction of a check
payment system for cocoa farmers also spurred the
establishment of local banks in many communities. The
financial performance of many RCBs started to decline,
however, for several reasons, including a drought that
affected the country in 1983, weak governing ability,
conflicts within boards of directors, and ineffective
management in many RCBs. By the end of 2008, 127 RCBs were
in operation with a total 584 service outlets. RCBs are
regulated by Ghana's central bank, the Bank of Ghana,
and thereby form part of the country's regulated
financial sector. RCBs are the largest providers of formal
financial services in rural areas and represent about half
of the total banking outlets in Ghana. |
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