Rural Banks make giant strides

From the first Rural and Community Bank (RCB) which was established at Agona Nyakrom in 1976, there are currently 145 RCBs with more than 800 agencies spread across the 16 regions of the country.

Although these banks control less than 10 per cent of the total assets of the banking industry, with over six million customers, RCBs have become unarguably the largest bank branch network in the country.

The banks also provide more than 15,000 direct jobs. Ashanti Region currently has the highest number of 30 RCBs, followed by the Eastern and Central regions with 24 and 20 RCBs, respectively.

Ashanti, Western, and Eastern regions are home to some of the most promising banks. The three regions also house RCBs with the largest number of agencies.

Read: ARB Apex Bank admitted to Ghana-Sweden Chamber of Commerce

Highlights of financial performance

The RCB industry has recorded a consistently positive growth in all key financial indicators over the past five years from 2016 to 2020.

For example, total investments grew by a handsome 147 per cent from Gh¢1.2 billion in 2016 to Gh¢2.9 billion by 2020. Loans and advances by the RCBs, the main avenue through which they generate profit also grew from GH¢1.1 billion to GH¢1.8 billion over the same five-year period.

The 124 per cent growth in deposits from GH¢2.4 billion to GH¢5.3 billion also resulted in a corresponding 102 per cent growth in total assets from GH¢3.0 billion to an impressive GH¢6.1 billion over the period under discussion.

Industry net worth, however, went down from GH¢407 million in 2016 to GH¢385 million by 2020, a global dip of six per cent.

The dip in net worth was due to the locked up funds, which meant that the RCBs could not realise interests on their investments in the years 2018 and 2019, which affected their profits and thereby led to a dip in net worth in two consecutive years. 

The various indicators for the five-year period are presented in the pictograms below:

Read: ARB Apex Bank posts impressive performance in 2019 – Profit, assets, operational income up

What this bodes for stakeholders

Due to the unique community ownership of the RCBs, they have often been spared some of the major challenges that the other banks have had to endure.

This is because the very essence of the banks is to, first of all, take care of the immediate needs of the rural communities in which they operate.

Shareholders are from the communities in which they operate, management and employees are often selected from among members of the communities. Another unique feature of RCBs is that most of them take on the names of the communities in which they are founded.

These and other characteristics make the various stakeholders in the RCB ecosystem feel a sense of ownership and a duty to ensure that the banks are sustainably run for the mutual benefits of the communities, shareholders, and customers.

The positive growth trajectory of key financial indicators of the RCBs show that the banks have built up the financial muscle to be able to accommodate the growing needs of the rural population of Ghana.

Some of the well-endowed banks are also in advanced talks with shareholders of some smaller banks with the possibility of making strategic investments in them to shore up their fortunes of recovery.


ARB Apex Bank’s interventions

ARB Apex Bank has had an interesting relationship with the RCBs. While ARB Apex Bank has RCBs, it has a very interesting but unique relationship with the latter being described as the “mini” central bank of the RCBs, it has a very interesting but unique relationship with the latter.

The RCBs are the main shareholders of ARB Apex Bank with the shareholders being the main and only direct customers of ARB Apex Bank. Some strategic and growth enabling investments are enumerated below:


Investment in ICT infrastructure

Though automated teller machines (ATMs) are not new in the country, the average RCB customer welcomed the introduction of ATMs across the country as one of the most strategic interventions in the sector by far.

So far, about 100 ATMs have been installed by more than 30 RCBs, bringing the needed convenience to their esteemed customers because the RCB debit card holder can access a plethora of services, including: purchase of fuel at all GOIL depots, payment for groceries at Shoprite Retail stores, payment for food at every KFC joints, and access to cash at all GH-Link branded ATMs across the country.

The second intervention, which is even more interesting is the fact that almost all RCBs are hosted on an ultramodern banking software platform at the head office of the ARB Apex Bank.

Courtesy a $8.0 million grant from the World Bank and the Ministry of Finance, the Data Centre and the core banking application software are currently being upgraded.

The upgrade will lead to the launch of Agency Banking for the Banks, the first phase of which would sign up more than 5,000 bank agents.


ISO 27001:2013 Certification

The bank has also been awarded with the International Organisation for Standardisation (ISO) 27001:2013 Certification in February 2020.

This Certification makes ARB Apex Bank one of the pacesetter banks to be certified in Ghana.

The Certification is a validation of our capacity to provide exceptional experience to our customers. It is a stamp of confidence in our people, systems and processes.


Conclusion

The RCBs have been doing a lot in the communities in which they operate. Over the years, the banks have invested heavily in life changing corporate social responsibility projects including: education, security, health care, and general community improvement.

It is true that in unity is strength, which is why all that the banks have done and will be able to do in the future would depend on the unity of RCBs in the country.

That is why it is even more important now for all RCBs to continue to live according to the essence of the brand position.

Source: Daily Graphic