Challenges of the Rural Banking Industry in Poverty Alleviation in Ghana

Type Thesis or Dissertation - Bachelor of Arts
Title Challenges of the Rural Banking Industry in Poverty Alleviation in Ghana
Publication (Day/Month/Year) 2013
The encouragement by the Central Bank to be established more Rural Banks in Ghana was meant to empower the rural people economically by making credits easily available to them through rural banks to improve their standards of living and contribute to the development of their communities. Notwithstanding the proliferation of Rural Banks in several parts of Ghana, rural poverty continues to puff up. As contained in the 2010 Population Census Report issued by the Ghana Statistical Service, 11,830,034.2 people representing 49.1% (nearly half) of the total population of Ghana are living in the rural areas with 4,637,373.4 being “poor”. The paradox of growing numbers of Rural Banks in Ghana and the deepening
poverty in the rural areas raised legitimate questions as to the effectiveness of Rural Banks as instruments for poverty reduction. This study therefore purposed to investigate the challenges of Rural Banks in Ghana that make their impact on poverty alleviation not being felt and seen substantially using the customers and staff of Bosomtwe Rural Bank as a case study. One hundred and twenty respondents (100 customers, 20 workers of Bosomtwe) were sampled and studied. After a careful analysis of the various responses given it was realized, although Rural Banks are making tremendous strides in fronting for rural poverty alleviation, problems like delays in loans repayment, failure on the part of customers to invest loans in productive ventures, and low level of income of rural dwellers were found to be their key limitations. Additionally, many of the causes of the situation of the rural folks were seen as not addressable by policies and service packages of the Rural Banks. They are in the nature of lack of market for produce, bad roads, and low level of education which are at variance with the clear focus of the Rural Banking Industry. With the nature of the problems identified in mind, it was recommended among others that, government does not take the establishment of Rural Banks as the magic wine for reducing rural poverty but other strategic and comprehensive policies like constructing the roads of rural areas, creating market for their produce and the building and resourcing of educational institutions in these areas must follow the establishment of Rural Banks to make for a holistic pursuit of rural poverty alleviation and rural development. Additionally, it was recommended that, Rural Banks institute service packages which would benefit customers in providing for the needs of their families like payment of school fees, and acquisition of personal belongings so as to correct the situation whereby customers rather spend loans meant for business expansion.

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