1Dr. David Ackah PhD, & 2Emmanuel Ackah
1Golden Sunbeam International College of Science & Technology, 2Kwame Nkrumah University of Science & Technology
Abstract
The mainstay of Ghana’s economy is agriculture and this is mostly practiced in the rural areas, and not until recently, individuals and the government did not show adequate interest in investing in economic activities such as farming, fishing and animal rearing. Over the years, the economic development of Ghana has been closely linked with the performance of the agricultural sector. However, due to inadequacy of funds and poor education, the agricultural sector is left undeveloped and this has contributed to low productivity, poor distribution and low consumption hence to the weak development of the country. Many farmers, fishermen and herdsmen face the problem of inadequate capital to acquire equipment that large-scale production requires. They also lack the skills and knowledge that such large-scale activities require and as such face difficulties in marketing their produce. The above mentioned problems amongst others led to the introduction of the Ghanaian Banking System in recent times known as Rural Banks. Understanding in the first place and recognizing the impact of rural banking on economic development will be an advantage that will reorganize individuals in the agricultural sector to patronize the banks. Under the depository institutions we have the commercial banks, and then life insurance companies for non-depository institutions. However, banking can be defined as a practice of accepting deposits and giving loans including monetary advisory services to customers. Kolari W. (1995) defined a bank as a financial institution offering two major services. These he said include transaction accounts which may be used to make payment for goods and services and are widely accepted by the public and then the issuance of direct loans to individuals, businesses and other institutions. Banks also represent a vital link in the transmission of government policies. From the perspective of various groups in the economy, access to banks credit and other banking services is absolutely essential for economic development. This paper is an investigation into the impact of rural banking on economic development. The study involves a survey of management and employees of Unity Rural Bank Limited and the inhabitants of “Ziope”; a rural area in the Volta Region of Ghana. Interviews and questionnaires were the main research techniques adopted for the data collected for this study. Results show that, for the bank to be able to contribute effectively to economic development, further education of the rural folks must be undertaken so as to enlighten the people about the benefits that comes with banking. Until that is done, the banks’ impact on economic development remains relatively low.
Keyword: Rural Banking, Economic Development, SMEs Support
