The ARB Apex Bank has expressed optimism that many rural banks will recover from the reeling economy as a number of them have already made significant profits.
Despite its confident expectations, players in the rural banking sector are worried about the rising inflationary pressure due to the government’s failure to support local production.
It is therefore admonishing more investment into local production to avert spiking inflationary pressures.
Board Chairman of ARB Apex Bank, Dr. Anthony Kwesi Aubynn, was speaking at the 20th Annual General Meeting of the Bank in Kumasi.
“Despite some temporary losses incurred at the last quarter of 2021, the Association of Rural Banks is well-positioned to recover from the impacts of the war compounded by COVID-19 related bottlenecks. We shall in the ensuing year, ensure operational efficiency, motivation of staff, granting quality loans and cost reduction to ultimately increase profit and maximize shareholder value,” he said.
Global economic growth as projected by the IMF is expected to plummet from 5.9% to 4.4% in 2022 stemming largely from the Russia-Ukraine war.
Ghana continues to reel from the exacerbating impacts of the war, affecting the performance of the banking industry, including rural banks.
With gradual recovery from the pandemic, the rural banking industry recorded marginal improvements with deposits growing by 11.5% from 5.3 to 5.9 billion Ghana cedis in 2021.
The raging Russia-Ukraine war has heightened uncertainty in the global outlook with a spike in crude oil prices and elevated inflation expectations.
The apex bank for the rural banking industry has thus admonished the government to invest in local production to avoid devastating impacts of external shock on the economy.
“Ghana imports a lot of things, we don’t produce. We don’t have strong productive sectors. These are the source of inflationary pressures. We need to produce more, eat what we grow and reduce the incidence of import consumption. The government should support the farmers. If we can produce locally, we can reduce food inflation,” he said.
Meanwhile, some rural banks continue to have significant amounts of money locked up with the Securities and Exchange Commission regulated institutions.
Managing Director of ARB Apex Bank, Alex Kwasi Awuah, however, assures of engagement with the regulators to salvage much funds to improve the liquidity position of the industry.
“Some of our banks went into crisis during the financial sector cleanup. Because some of them had their funds locked up with some financial institutions and that has contributed to our losses. But, we are still in discussions with them and possibly restructure these payments so that some respite will be to the side of the rural banks,” he said.
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