Rural banking in Ghana: it’s impact on rural farmers (a case study of Adansi Rural Bank)

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In 1976, the Ghanaian government, through the Bank of Ghana, established Rural Banks to channel credit to productive rural ventures and promote rural development. This strategy was intended to improve the economic and social life of the rural poor. The initial expectation was that, in the long term, credit will enable the poor to invest in agricultural and non-agricultural productive assets, as well as adopt new technologies and farming methods among others. However, three decades down the line the impact of rural banking on rural development, especially agricultural development has been described as very insignificant. Against this backdrop, the study sought to examine the impact of rural banking on rural farmers, using Adansi Rural bank in the Ashanti Region as a case study. Using convenient sampling technique, a total of 76 farmers who engage with the bank were selected to represent the farmers, whiles 19 credit officers drawn from seven branches of the bank to understand the bank’s perspective. The analysis of the result revealed that the bank’s financial support to farmers has significantly decreased over the past 6 years, raising concerns about lack of interest by rural banks in supporting farming activities. The result further revealed that rural banking has not impacted positively on the operations of rural farmers in the Adansi District of the Ashanti Region. The result further revealed that delays in loan processing, high interest rates and charges, demand of collateral security and short term repay ment period are some of the challenges hindering the ability of rural farmers to access financial support from rural banks. The study recommends, the government of Ghana should support rural banks to enable them provide financial assistance to farmers to improve their farming activities.
A thesis submitted to The KNUST School of Business in partial fulfillment of the requirement for the degree of Master of Business Administration (Strategic Management & Management Consulting), 2015