The President of the Association of Rural Banks, Ghana, Kwame Owusu Sekyere, has called on the government to release GH¢460billion in locked up funds belonging to some rural and community banks.

According to him, rural and community banks still have locked up funds with some defunct Security and Exchange Commission-regulated (SEC) institutions, and this is having adverse effect on them.

Additionally, some RCBs have locked-up funds with some existing financial institutions, such as SIC Financial Services and NTHC, which are facing liquidity challenges.

He has, therefore, appealed to the government, Ministry of Finance and SEC to intervene swiftly to help access these funds to improve liquidity of the affected RCBs to drive lending to the micro economy of the country.

Referencing to section 149 and 150 of the 2024 Budget Statements, where the Finance Minister highlighted that government would be addressing outstanding legacy issues following the 2017 – 2019 financial sector clean up exercise, Lawyer Owusu Sekeyere expressed hope that government would implement that section of the budget statement to enable access to locked-up funds.

According to him, in spite of the locked-up funds and the ramifications of the DDEP, the rural banking sector remains relatively stable and sound due to good leadership, Bank of Ghana and the ARB Apex Bank PLC’s effective supervision and regulatory framework.

However, the board of directors and management of rural and community banks (RCBs) have been urged to prudently manage their resources in order to stay afloat.

This call comes on the back of the drastic reduction of coupon rate and longer tenure of maturity of new bonds issued by the government due to the domestic debt exchange programme (DDEP), which has adversely affected some RCBs, resulting in liquidity shortfall, reduction in interest income, impairment, among others.

National Chairperson for the Association of Rural Bank (ARB), Kwame Owusu Sekyere, Esq., in an address at the 9th edition of the Rural Banking Week in Sunyani in the Bono Region, emphasised that due to the repercussion of the DDEP on some of its member-banks, the leadership of the ARB lobbied for exemption but their plea was not accepted.

He, however, indicated that many of the affected banks are still doing well in terms of profitability.

Suspension of dividend payment

The ARB National President bemoaned the Bank of Ghana’s directive of suspending the declaration and payment of dividend and other distribution to shareholders.

According to him, this decision has caused dissatisfaction to most shareholders; and it is also discouraging prospective shareholders from investing in RCBs and existing ones from buying additional shares.

He, therefore, appealed to the regulator to be flexible and allow RCBs with the strength to pay out dividends do so.

Future outlook

Touching on the future plans of the ARB, Lawyer Owusu Sekyere advised member-banks to diversify their investment portfolio in order to reduce portfolio risk.

Also, he urged Chief Executive Officers and their management teams to prioritise aggressive deposit mobilisation to get adequate resources for their banking business in order to generate more income.

In view of the unfavourable operating environment, RCBs must improve credit administration to scale down non-performing loans (NPL).

Rural Banking Week

The 9th edition of the Rural Banking Week was celebrated on the theme ‘Women in Sustainable Rural Banking Business for Economic Growth’.

The theme, according to Lawyer Owusu Sekyere, is very appropriate as the ARB recognises the potential of Rural and Community Banks (RCBs) ladies in driving sustainable business and economic growth.

It also demonstrates the fact that RCBs cannot thrive as an industry without promoting gender equity at the management and leadership level.

The rural banking industry is at the turning point where gender equity at the management and leadership level cannot be ruled out.

Going forward, the Executive Director, Mrs. Comfort Owusu, has indicated that the National Council of the Association of Rural Banks will champion and improve female representation at the top so as to reduce the huge gender disparity in the RCB sector.

It will also prioritise the interest of women so that together, they will build sustainable and resilient rural banking which is a force to reckon with.

Finally, efforts will be made to continue to deepen the relationship with regulators and partners, such as the Bank of Ghana, the ARB APEX Bank PLC, GIZ and others, to address issues that

would strengthen the performance of the rural banking industry and also reposition it as a force to reckon with.