THE ROLE OF RURAL AND COMMUNITY BANKS IN THE DEVELOPMENT OF MICRO ENTERPRISES IN THE EAST MAMPRUSI DISTRICT OF THE NORTHERN REGION OF GHANA

Abstract

Rural and Community Banks form part of the regulated financial sector by the Bank of Ghana. They serve as the largest providers of formal financial services to people living in rural areas. The aim of this study was to investigate the role of these Banks in the development of Micro Enterprises, such as bakery, craft, pito brewing, batik tie and dye production, weaving, blacksmithing, soap making, Shea butter and groundnut oil extraction, etc., in the East Mamprusi District of the Northern Region of Ghana. Qualitative and Quantitative Research Strategies, the Case Study Research Design and various Research Methods, such as Structured Questionnaire and Focused Group Interviews, were the key research tools employed for the study. The study shows that there are only two RCBs in the study area, including the East Mamprusi Community Bank Ltd. (EMCB) and the Bawku East Small Scale Farmers Association (BESSFA) and their branches/agencies. The study reveals that sole proprietorship dominates the ownership pattern of Micro and Small-Scale industrial sector in the study area. The study also revealed that over 70 percent of Micro Entrepreneurs ever received loans from RCBs either as a start-up capital or to boost their businesses. Furthermore, the study revealed RCBs have been organizing formal and informal training for the entrepreneurs in the form of marketing, production and financial management skills. Finally, the study suggested that the key problem faced by RCBs in their quest to support Micro Enterprises in the study area is non payment of loans and interests which hampers their capacity to provide the needed support for the enterprises. The study, therefore, recommends that the banks should decrease their interest rates charged on micro finance loans to facilitate timely repayments and avoid defaults in repayments.