Impact of rural banks on the agricultural sector: a case study of Sekyere Rural Bank in Ashanti Region

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Like many developing countries, poverty remains a serious problem in Ghana and it remains predominantly a rural phenomenon. Rural development and for that matter poverty reduction has received a great deal of attention in development literature, in national plans of various countries, on political platforms and in lending programmes of most donors. In Ghana the need to improve the living and working conditions of the rural people back to the colonial era. One of the major problems facing the rural population in Ghana has been lack of credit. This has resulted in their inability to increase their productivity, income and improve upon their standard of living so as to rise out of poverty. It is in the light of this that the Bank of Ghana introduced the rural banking concept to meet the credit needs of the rural people and also to assist in the reduction of poverty in the rural communities. The major concern of this study has been to examine the impact of rural banks in the agricultural sector categorized into cash crop producers, food crop production and animal rearers in terms on the effects on employment, income, standard of living and reducing poverty in the rural areas using Sekyere Rural Bank as a case study. This was done by (i) Examining the various kinds of credit/loan offered by the bank to the people in the community. (ii) The effects of the credit/loan on income and standard of living of the people in the community. (iii) The contribution of the bank in the provision of public goods and services specifically education, health and water and sanitation in the development of the community. The study used both primary data in terms of questionnaires and interviews and secondary data in terms of annual reports of Sekyere rural bank and simple table showing percentages, frequencies, cross tabulation and bar charts for the analysis The main results of the study are that the Sekyere Rural Bank provides about four types of Loan to its customers and that within a period of four years the bank was able to increase its loan portfolio by some margin. Loans granted by the bank have also impacted positively on poverty reduction in agricultural sector Kwabre and Afigya Sekyere districts in the Ashanti Region. Incomes and standard of living of respondents were improved. More jobs were also created. The study thus reinforces the notion that institutional credits can be use to break the chain of poverty. Finally, funds provided for community development by the bank has been increasing from the past four years studied.
A Dissertation submitted to the School Of Business (Finance and Banking), Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the degree of Masters in Business Administration, 2008