Book Review

Ghana-Microfinance.com is proud to present to you a review on the first ever text and reference book on rural banking practice in Ghana.

The book, titled: Rural Banking in Ghana, is authored by a former Deputy Governor of the Bank of Ghana, Mr. Asiedu Mante and seeks to provide guidance to bankers (both under training and practicing) and also serve as a reference on rural banking in Ghana.

In all the book consist of 15 chapters.

Chapters one to three of the book discusses the reasons for the establishment of rural banks, the architects, the role of the Central Bank, the management structure of rural banks and the evolution of rural banks.

Chapters four to 10 detailed the financial intermediation roles, credit management practices and challenges, security and operational issues, internal controls, prudent supervision and causes of distress in rural banks.

Mr Asiedu-Mante devotes the 11th chapter of the book to insurance in rural banking, though some of the details found in other chapters could be very useful to academics, practitioners and students of banking, finance and insurance. It simply shows the way the concepts have been defined and analysed.

Chapter 12 focuses on international assistance to the rural banks, chapter 13 touched on issues relating to the ARB/Apex Bank and the rationale for it establishment, functions and the expected roles to complement earlier analysis on the rationale, justification and relevance of the Association of Rural Banks and the desired complementary roles the two institutions should play in the effective development and functioning of rural banks in Ghana.

Chapter 14 opens up the canker on the avid subject of agriculture financing, which is perceived as risky, yet the very nerve of the country’s economic emancipation.

The last chapter proffers ideas on the future of rural banking.

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Angel Fund from Venture Capital Trust to take off next month

Business start-ups will from next month be able to attract ready capital in return for ceding ownership of their businesses.

The Angel Fund, an initiative of the Venture Capital Trust Fund is making the arrangement possible.

The fund will also provide technical assistance to such entrepreneurs.

Managers of the fund are currently agreeing terms for investors willing to commit their resources for a successful take-off.

Investment Officer at Venture Capital Trust Fund, Anthony Siaw told Joy Business entrepreneurs will be given the opportunity to convince managers of the fund that they have the best deal.



Source: Joy Business/Ghana

SEC to license financial journalists who advise for profit

The Securities and Exchange Commission has indicated that financial journalists who advise for profit will soon have to be licensed before they can operate.

According to the SEC, the directive aims to bring the industry laws in line with international best practices.

It will also ensure that those who give investment advice are also licensed.

One of the architects of the securities law, Adu Anane Antwi told Joy Business the rationale for the directive is founded on the grounds that the advice of journalists can determine where investors put their money and journalists must not be allowed to offer such critical service if they have not been certified to do so.

The Securities Industry bill is currently before the Attorney General’s Office for scrutiny to ensure it is not in conflict with the country’s laws.

It will then be forwarded to Cabinet for consideration before being presented to parliament.



Source: Joy Business/Ghana

Awutu-Emasa Rural bank declares profit

The Awutu-Emasa Rural Bank Limited at Awutu Bereku in the Awutu-Senya District of the Central Region declared a net profit of GH¢157,332 in 2010 as against GH¢124,347 in 2009.

The bank total assets also increased from GH¢3,755,238 in 2009 to GH¢4,709,510 in 2010.

Mr Acquah-Arhin, Chairman of the Board of Directors of the Bank, made this known at the 22nd Annual General Meeting of the shareholders at Awutu Bereku.

He said total loans and advances granted to customers of the bank increased from GH¢1,837,852 in 2009 to GH¢2,554, 763 in 2010.

According to him the money went into agriculture, education, the transport sector and other businesses.

Mr Eric Osei-Bonsu, managing director of the ARB Apex bank, in an address, commended the management of the bank for the satisfactory performance.

According to him, the operations of 34 rural banks with 233 branches and agencies have so far been automated under the ARB Apex Bank computerization program.

He said “all the banks are running on the latest version of the emerge software known as T24 to argument the operations of rural banking".

The MD said rural and community banks therefore log unto a central database system which would be hosted at the ARB Apex bank head office in Accra through a wide area network.

He noted that the Apex link Money transfer which is a domestic transfer of funds through the Rural and Community Banks and ARB Apex Bank branches has come to fill a huge void in the National Payment System.


Source: GNA

Banks snub small enterprises

Contrary to the view that the private sector - and more especially Small and Medium Enterprises (SMEs) - propels the economic growth of developing countries, most of these SMEs in the country are being denied access to loans by a considerable number of commercial banks for lack of adequate bookkeeping.

“How can we develop this country collectively - when those who are supposed to facilitate the take-off of the economy apply complex and prohibitive lending procedures to refuse loans to these SMEs on the grounds that they lack basic bookkeeping to enable them qualify for loans?” Nana Dwomo Sarpong, an Accra business executive, queried.

Nana Sarpong, who is also an ardent advocate on environmental issues, drew a parallel to this delicate issue with developed economies, explaining that in advanced countries like the US and others, SMEs can easily access the services of chartered accountants to prepare their bookkeeping to enable them become credible to the banks.

He said in Ghana those SMEs which could not convince their banks for loans are requested to provide collateral, especially immovable assets worth millions of cedis. He asked: “How can these people provide this collateral to enable them access loans?” The result is that these SMEs, which are the solution to the intractable unemployment problem facing the country, will continue to remain in the state they find themselves.

Nana Sarpong disclosed that some banks in the country promote their banks with perceived low base rates - e.g. 22%. Unknowingly, people see it as a good rate for loan; but the fact is that these banks hide a facility fee of 0.5%-1% and borrowing fee of 4% among others, which raises the base rate to about 27-28% and the borrower has to contend it with during the period of repayment. He urged the banks to factor all these fees into their base rates for the public to decide which bank offers the best rates.

Nana Sarpong also accused some banks in the country of making huge profit out of indirect borrowing from their clients’ deposits at their expense. He said what the country needs now is continuous improvement by the SMEs for the economy to grow.


Source: By Kwame Mensah/B&FT/Ghana

Banks Urged To Assist SMEs To Grow

Financial institutions operating in the country have been called upon to assist Small and Medium Scale enterprises to build solid businesses based on sound ethics and good business practices.

Mr. Charles Sirois, Founder of Enablis Entrepreneurial Network who made the call during interactions with the management team of UT Bank, said: “The development of any nation is based on how well grounded its SME base is, and this can only be achieved through a stable political environment which Ghana already has.”

Mr. Sirois said Ghana has what it takes to develop the SME sector to fuel domestic growth, adding that “I have a lot of hope for the markets in Africa because I know the world needs Africa and Africa will definitely take its place in the world’s economy, but that will depend on how well we build the SME sector.”

He said there are two Africa’s “the Africa on its knees and the Africa on its feet , and Ghana is definitely on its feet; all that is required now is a solid entrepreneurial base to deliver quality life to its people.”

Mr. Sirois commended UT Bank for taking up the bold initiative and “catching the dream of developing SMEs to take their rightful place in the social and economic development of the nation.” He was full of praise for Mr. Prince Amoabeng, CEO of UT Bank, for his personal commitment to the UT dream and his entrepreneurial prowess.

For his part, Mr. Amoabeng thanked Mr. Sirois for his visit and said: “It was not difficult for us to partner ENABLIS because we believe we have a common goal, so this is a natural alliance.” He pledged the continuous commitment of the UT Group to the development of the SME sector. “ Having been one ourselves, we appreciate the peculiar challenges they face and we have what it takes to offer solutions.”

The two organisations later signed a memorandum of understanding to seal the partnership. Last year, UT Bank partnered Enablis Ghana with a grant of GH¢100,000 for its business launchpad competition - from which ten up-and-coming entrepreneurs are being assisted to build their businesses.

Enablis is a membership-based organisation that believes the entrepreneur is key to successful SME business. The organisation supports members to be successful business owners by sharpening their personal skills, problem-solving capacity, creativity, integrity, and business acumen.

The global non-profit organisation began operations in Ghana in October 2009, and currently has over 130 members. The members benefit from regular training based on a unique plan for each member designed to take them to the next level. It has also designed unique funding vehicles exclusively for its members which focus on filing the financing gap that confronts entrepreneurs.

Source B&FT

South Akim Rural Bank makes profit

The South Akim Rural Bank made a net profit of GHC550, 509.00 last year, representing 30 per cent increase over that of 2009.

The bank also increased its total assets from GHC10, 823, 696.00 to GHC14, 337,164, representing 32 per cent over that of 2009. The Chairman of the Board of Directors of the bank, Mr William Kwadwo Boateng, announced this at the 26th Annual General Meeting of the bank, at Nankese.

He said the bank was among the few rural banks operating fully on the Globus eMerge, a technological way of improving banking transactions and checking fraud.

Mr Boateng said the shareholders fund increased from GHC1, 074,662 to GHC1, 323,581 in 2010 despite the provision of GHC100, 000 for the Development Fund to meet the cost of refurbishment of the Osenase Agency and provision for end of service benefits to management and staff in line with the new National Pension Act, 2008.

He said the bank, which had has been a member of the Ghana Club 100 since 2002, was in September last year awarded the 25th position. On social responsibility, Mr Boateng said the bank awarded six scholarships to students to pursue Senior High School education, last year, bringing to 84, the total number of beneficiaries under the scheme, since i= t started in 2003.

Mr Boateng appealed to parents to support their children to get minimum aggregate of 15 for public schools and six for private schools at the Basic Education Certificate Examination to enable them to enjoy the scheme. The Managing Director of the ARP Apex Bank, Mr Osei -Bonsu, commended the bank for the good performance. He expressed concern about attacks on banks by armed robbers recently and entreated the financial institutions to tighten security.

Source: Ghanaweb.com

Ghana inflation dips, seen remaining low

The annual rate of inflation fell to 8.90 percent in May from 9.02 per cent in April on the back of lower food prices, the Ghana Statistical Service (GSS) said on Wednesday.

Announcing the figures at a press conference in Accra, Government Statistician, Dr Grace Bediako, said the marginal decline in inflation was because of the downward trend in the food and non-alcoholic beverages group.

“The non-food inflation is almost three times higher than the inflation in the food group,” she said.

Food inflation during the period was 3.93 per cent while non-food average inflation rate is 12.15 percent.

Inflation rates in the regions ranged from a low of 4.15 percent in the Northern Region to 12.23 percent in Greater Accra Region.

The Upper East, Western, Central and Greater Accra regions recorded inflation rates above the national rate of 8.90 percent.

Dr Bediako said there was the likelihood that inflation would remain in the single digits for the next few months unless there was a dramatic change in the current trends.

“We expect inflation to be in single digits for a couple of more months unless things change dramatically,” she said.

Source: GNA

Former BOG Deputy Governor sees mergers of rural banks

Mr Emmanuel Asiedu-Mante, a former Deputy Governor of the Bank of Ghana, has said most rural banks could merged because of the new capital adequacy requirement and competition posed by increasing number of universal banks.

"I think the Central Bank's directive on minimum capital and the fierce competition on the Ghanaian banking scene will move the rural banks to consider merging as a means of survival," he told journalists after the launch of his 327-page book on rural banking in Ghana on Saturday. The Bank of Ghana has pegged the new capital requirement for rural banks at GH¢150,000 but few of them had met the requirement. There is, however, no fixed time for the banks to meet the requirement. Mr Asiedu-Mante said an expanded operation emerging from increased capital base could transform most of the rural banks into strong and viable institutions.

His book titled: 93Rural Banking in Ghana" is the first-ever text and reference book on rural banking practice in Ghana that seeks to provide guidance to bankers (both training and practicing). The book detailed the financial intermediation role of the rural banks, credit management practices and challenges, security and operational issues, prudential supervision and causes of distress in rural banks and outlines the development roles expected of rural banks.

Mr Asiedu-Mante currently the Board Chairman of Stanbic Bank, Ghana, said the strongest and the best managed rural banks could become the head office in the merged entity while the others become branches. However, he said, a lot of work needed to be done to ensure that the mergers work well, especially the education of stakeholders and getting the necessary consent of all.

Mr Kwesi Amissah-Arthur, Governor of the Central Bank, who chaired the function, noted the pioneering role played by the Bank of Ghana in nurturing rural banks to serve as catalysts in the communities they served. Mr Asiedu-Mante served at the central bank of Ghana for about 38 years, during which time he gained considerable experience in rural banking activities and regulations.

He was the Chairman of the Bank of Ghana's Transition Apex Steering Committee 97 a committee that saw the formation of the Apex body for rural banks in Ghana.

Source:Ghana News Agency

World Bank And IMF Policies Affect Ghana

Policies of Bretton Woods institutions including the World Bank and the International Monetary Fund (IMF) are said to have cost the nation severely, a study from the Institute of Economic Affairs (IEA) has revealed.

Ghana and most African countries have depended on these institutions for financial assistance for several years. Even though in 2007, the New Patriotic Part (NPP) government weaned the country from the IMF, the current administration secured loans from the Fund due to fiscal instability caused by high budget deficit and global financial crisis that hit the country.

Policy advice to African countries such as Ghana includes promotion of specialization in production and trade, elimination of state subsidies, particularly to industry and agriculture, external trade liberalization, macro-economic retrenchment among others.

However, the research underscored that there were costs to these “market” policies despite their claim to efficiency, since markets do not always work perfectly and may not always deliver maximum economic and social welfare.

Delivering the paper on “Mitigating the Costs of “Washington Consensus” Policies: Titbits for Ghana and Other African Countries” attended by policy-makers, Parliamentarians, among others, Dr. John Kwabena Kwakye, a Senior Fellow of the institute therefore called for necessary interventions to correct the associated market failings and mitigate the socio-economic costs involved.

“Washington Consensus policies also profess the superiority of private enterprise, considering the private sector is more efficient compared to “statism” that leads to low productivity, low efficiency and corruption, reflecting the notion that “government’s business is nobody’s business.”

The theory of comparative advantage, the study revealed, encourages countries to specialize in the production of products which they produce “more efficiently” than others.

Ghana and other African countries have therefore continued to produce traditional primary products such as cocoa, gold, and timber.

Dr. Kwakye said, “The push for African countries to continue to pay attention to their traditional primary products in which they are professed to have “comparative advantage,” has left the continent as the “hewer of wood and drawer of water” in the international production and trading system and stifled its development.”

He therefore urged African countries to break out of this liberal-orchestrated charade and rather follow the example of the South East Asian countries to diversify their economies and promote industrialization if they are to develop and break out of poverty. “Our recommendation is that there should not be out-right liberalization. If there is the need to raise tariffs to protect local industry, we should do so.”

Other recommendations included regulation of the financial sector to reduce high interest rates, macro-economic restructuring, selective privatization, among others.

“State subsidies often entail fiscal costs and may create moral hazard. Here too, a system of selective, targeted, rather than universal, subsidies is the best approach,” Dr. Kwakye noted.

On trade liberalization, he urged Ghana and African countries to use both tariff and non-tariff instruments to “shield” their industries from undue competition from imports and allow them to flourish.

On high interest rates, the economist urged the Bank of Ghana to regulate lending-deposit rate spreads to reduce cost of borrowing and attract people to transact business with the financial intermediaries.

Source: daily guide.

Bank of Ghana to issue 3-year-bond to pay debts

The Bank of Ghana will Thursday issue a three-year bond to raise funds to pay off maturing short-dated government instruments.

Joy Business has also learnt government would also use part of the proceeds from the bond sale to fund some expenses in this year's budget.

Government through the Central Bank is hoping to raise GHS300 million.

The bond will be opened to local and foreign investors. However, the Bank of Ghana is yet to determine the yield for investors after the auction.

This will be the third time this year the government is issuing a cedi denominated bond.

Government in April issued a GHS320 million three-year bond to pay-off government maturing debts. It was oversubscribed nearly threefold.

Source: myjoyonline.com

MT Financial Services disburses Gh¢1.3m in loans in a year

Ignorance has been identified as a major factor preventing some small businesses from accessing funding opportunities to enhance their operations.

Managing Director of MT Financial Services in Kumasi, Solomon Suuk Salalipaak, says there are prospects to increase incomes of local businesses if banks are committed to supporting ventures at the grassroots.

Barely a year after opening its Amakom branch, MT Financial Services has roped in over 5,000 customers and disbursed over GHS1.3 million is small loans to informal business operators, mostly women groups.

The company operates three branches in Kumasi and Tamale.

Mr. Suuk told Luv Bizness Report the high loan recovery rate is indicative of the sector’s growth potentials if encouraged to access financial products.

“There are a lot of the down-trodden - the have-nots - who don’t even want to visit a bank because they think the bank is meant for certain people with certain standard. So when they come and we’re able to meet their needs, then they gather the confidence to always come to us. So there are some of them who even though are in need of funds to project their businesses, they don’t even know where to go”, he stated.

Mr. Suuk has challenged other financial institutions to spread access to banking services to communities outside of urban centres.

He observed that “when you go to the very small towns and villages, that is where you’re expanding the outreach and that is where you are drawing majority of the people into the banking services industry. I think other banks should look at our style and actually go round and identify people who by all standards would never have dreamt of going to the banks. It shouldn’t be the rich – banks give money to the very rich, they don’t look at the very poor but people must become rich through somebody’s initiative”.

MT Financial Service is reaching out to the Kumasi Children’s Home as part of its corporate social responsibility programmes. The company will is also adopting three needy students each year for educational sponsorship from Senior High School to the University level.



Story by Kofi Adu Domfeh/Luv Fm/Ghana

Fiagya Rural Bank records impressive profit

Fiagya Rural Bank at Busunya in the Nkoranza North District, has recorded a net surplus of GHC165, 195.00 in the 2009/2010 financial year.

Total deposit increased from GHC2, 323,125.00 to GHC3, 190,531; investment jumped from GHC1, 055,527 to GHC1, 475,690.00, whilst total assets of the Bank increased by 36.2 percent.

Professor Kwasi Nsiah-Gyabaah, Chairman of the Board of Directors of the Bank announced these at the Bank’s 26th Annual General Meeting (AGM) at Bunsunya at the weekend.

He said the previous year’s money of GHC2, 839,571.00 increased to GHC3, 866,810.00 with stated capital stretching from GHC120, 700.00 to GHC184, 119.00, representing 52.5 per cent improvement.

Prof. Nsiah-Gyabaah said during the year under review, the Bank released GHC1, 868,576.00 for loans and advances, thus recording 35.1 per cent increase as against last year’s amount of GHC1, 383,102.00.

He commended shareholders and customers of the Bank for their contribution to the growth of the financial institution.

Prof. Nsiah-Gyabaah said that the Bank would open a branch in Sunyani and expressed the hope that workers would patronise the facility if it becomes operational.

Mr Kofi Bonsu Boakye-Boateng, Chairman of Brong-Ahafo Chapter of Association of Rural Banks, praised the Bank for the splendid performance, and said it was an outstanding Rural Bank in the country.

He advised staff of the Bank to avoid fraudulent acts and to treat customers politely.

Mr Boakye-Boateng asked shareholders of the Bank to purchase more shares to build a strong financial base for its development.

Mr Clement K. Dadzie, official of Apex Bank Limited, advised management of the Fiagya Rural Bank to employ qualified personnel such as graduates with accounting background.

Mr Akwasi Owusu-Sekyere, manager of Fiagya Rural Bank, appealed to shareholders and customers to inform management about shortfalls in the bank’s operations.


Source: myjoyonline.com