Debates of 17 May 2006

Order! Order! Correction of Votes and Proceedings of Tuesday, 16th May, 2006. Pages 1 …7.

Mr. Speaker, page 7, paragraph 10 (i), that is the first name, Mr. Ernest Poku, Minister for National Security (Designate). Mr. Speaker, the gentleman is “Mr. Francis Poku” and not “Ernest Poku”.

Thank you very much. We will make the necessary correction; it is ‘Francis'.
Pages 8…13 - hon. Member for Wa West.

Mr. Speaker, on page 13, the Committee on Local Government and Rural Development met with the Senate Delegation from Nigeria, Sokoto State specifically, and in attendance was a friend of the Committee, Mr. Mensah -- [Interruption.]

Thank you. Page 14. Hon. Members, we do not have any Official Report.

Hon. Members, we have a delegation from the State of Sokoto, and
it is a delegation of the Senate Committee on Local Government Administration. They are led by the hon. Commissioner, Ministry of Local Government, Sokoto State, and head of the delegation; and he is Alhaji H. Halilu -- [Hear! Hear!] Other members are Alhaji G. M. Rajinduma, who is the Chairman of Local Government -- [Hear! Hear!] Alhaji S. Nahantsi, Local Government Chairman -- [Hear! Hear!] Alhaji M. H. Rukiawuri -- Chairman of Local Government -- [Hear! Hear!] Alhaji Y. Abdulahi, he is also Chairman of Local Government -- [Hear! Hear!] and then we have Alhaji M. G. Binji, also Chairman of Local Government -- [Hear! Hear!] -- and then Alhaji Sani Bunu, also Chairman of Local Government. [Hear! Hear!]
On behalf of the House, I wish you a pleasant stay here in Ghana, and welcome to Ghana.

Yes, hon. Member for Lawra/Nandom.

Mr. Speaker, items 5 (a) and (b) on the Order Paper have been laid but they have the same L.I. 1822. I do not know whether it is inadvertent.

Mr. Speaker, it is an obvious mistake. I will have it corrected.

Mr. Speaker, I am very sorry but I just want your guidance on this matter. Mr. Speaker, we know as a fact that the appointment of the Attorney-General has been revoked by His Excellency the President and the new one appointed has not yet been approved by this House. Therefore, there is no Attorney-General to lay a Paper before this House.
Mr. Speaker, I want your guidance on this matter. I do not know whether you should put the “Deputy” there; because the “Deputy” purports to lay the Paper on behalf of the Attorney-General but there is no Attorney-General of the Republic of Ghana as we are speaking now. I need your guidance on this so that we are very clear as to whom we are dealing with as at this time, on this particular Bill.

Deputy Minority Leader, I wish you had raised this matter before the Paper was laid. Next time, I will know how to deal with that matter. By the Chairman of the Committee -
Report of the Committee on
Employment, Social Welfare and State Enterprises on Persons with Disability Bill

Mr. Speaker, thank you for giving me the opportunity to present this Statement on bamboo, the golden grass. Bamboo is a non-timber evergreen plant mainly distributed in sub- tropical and tropical zones. Because it is widely distributed, grows fast, has a high generating rate, it is considered an ideal substitute for sustainable development. Bamboo's physical properties are similar or superior to wood. Bamboo shoots have huge market potential as natural, high fibre food.
Mr. Speaker, there are hundreds of products that have been developed from bamboo. Most of these products are produced with small hand tools in rural communities. Examples of the products are baskets, jewellery boxes, trays, coasters and flower vases. Other items include napkin holders, jewellery, bags, cups, and tablemats. There are other products that require the use of heavy industrial machines like toothpicks, skewers, bamboo ply (plywood), laminated boards (timber), floorings and roofing sheets. The interesting thing is that even the industrial processing depends heavily on inputs from the rural processes.
Mr. Speaker, over the recent fifteen years, China has achieved great progress in the development of her bamboo sector. A series of bamboo panel products superior to timber were developed. Bamboo curtains, mats and carpets appear in international markets. New products based on bamboo charcoal, vinegar and extracts of bamboo leaves, including medicinal products, natural pesticides, beverages, daily toiletries were also marketed because

of their great development potentials.

Beyond traditional handicrafts and practical daily products, China's bamboo sector has become a fast emerging rural industry. It plays an important role in reducing timber consumption, protecting natural forests, alleviating poverty by creating employment avenues for income generation. Bamboo cultivation also helps to improve the environment and encourage rural socio-economic development.

Mr. Speaker, the Indian Government has also started training rural communities in bamboo processing and this move has generated jobs in the northern parts, especially Tripura. Unfortunately, Africa has not taken bamboo, which is quite common seriously, and her forests are getting degraded yearly.

The Government of Ghana has however taken some steps to pursue this agenda by setting up the Bamboo and Rattan Development Programme (BARADEP) under the Ministry of Lands, Forestry and Mines. This attempt if taken seriously can create jobs for the unemployed and alleviate rural poverty.

Mr. Speaker, bamboo can be used to protect the environment against erosion, landslides, the building of top soil on degraded lands as well as protection of water bodies. Most of the mining areas that have been degraded can be regenerated faster with bamboo. After planting bamboo for whatever purpose, the culms can be harvested after four years, for processing or for sale. Bamboo is also biodegradable.

Mr. Speaker, in making this statement, I seek to bring to light, the great potentials that exist in bamboo as a tool for rural development and to charge colleague MPs and constituents to cultivate bamboo for employment and income-generation. I equally call on Government to consider investing in bamboo as part of its Millennium Development Goals.

My clarion call to the media is to challenge them to spread the golden message of bamboo and its amazing potentials.

Thank you, Mr. Speaker.

Mr. Speaker, I rise to support the Statement made by the hon. Member for Adenta on the potentials and usefulness of bamboo.
Mr. Speaker, just like bamboo, the usefulness of it, we also have the palm tree from which a lot can be made. The unfortunate thing is that we are not paying serious attention to the less popular species. And because of this, our forests are being depleted. Timber is very expensive today, because timber is becoming more and more scarce. As such, we should look at the other less popular species which are very useful in building construction and many other things. The hon. Member who made the Statement has hit the nail right on the head. So I would also want to urge the Government to take this seriously so that we can have good use of bamboo to replace timber or to augment the use of timber in building construction.

Thank you, Mr. Speaker. Mr. Speaker, this Statement on bamboo is long overdue. We all know the importance of bamboo in the construction business. Years past, bamboo was used in the construction of our houses. Presently bamboo is used in the making of furniture and doors. Quite recently, there was a display of bamboo products at the Foyer and one would see that bamboo, when used appropriately, gives a nice picture to our rooms. So the use of bamboo should be emphasized and should be encouraged in this country to replace our timber which
is dying out such that we do not have enough in our forest.
Mr. Speaker, apart from this, bamboo also gives us employment. If we are able to emphasize the use of bamboo, we can give a lot of employment to our youth. Right now, I am rehabilitating some schools in my constituency, from my share of the Common Fund; and instead of using wawa to support the beams, the local people have gone to the forest to cut bamboos. They are bamboos that are lying waste, which are now being used to replace the wawa trees which are scarce.
So Mr. Speaker, all hon. Members of this House should take this matter seriously and make sure that they de- emphasize the use of wawa and other scarce tree species and put emphasis on the use of bamboo.
With these few words, I wish to support the hon. Member who made the Statement.

Thank you, Mr. Speaker, for the unique opportunity to contribute to the Statement on the floor.
Mr. Speaker, the bamboo industry offers enormous potential to the economy of this country. Mr. Speaker, the bamboo industry, if well supported, would promote the craft industry in this country because looking all over the country you will see how Ghanaians are being creative in the use of bamboo to make so many things.
Mr. Speaker, it is quite ironical that this has not brought much importance to the bamboo industry and that we seem to be making mockery of the bamboo industry.
Mr. Speaker, I would urge all hon. Members to make sure that we place much premium on the booming potential that the bamboo industry offers this country. Mr. Speaker, talk of employment and I would

Mr. Speaker, on a point of order. Mr. Speaker, the hon. Member is misleading the House. The areas that the President attached his name were areas that were doing well already. So it is not true that the areas where the President's name was attached to are doing well because of that. In any case, the issue about bamboos was started in the First Republic and we followed that through until we decided not to get involved. So I do not know what he is talking about.

Mr. Speaker, I do not want us to go into debate on the benefits of the Presidential Initiatives but if we should go into it, my hon. Colleague would be surprised that a lot of benefits are accruing from the Presidential Initiatives. I do not want us to debate that; we will do that at the appropriate time. But for now my emphasis is on the bamboo industry.
Mr. Speaker, some of us who come from the forest areas, in those days, we used to fear to go where the bamboos were scattered because it was believed superstitiously that dwarfs lived in those areas.
As a country, we have over the years neglected and abandoned the bamboo industry. So if today, there is a miracle in the bamboo industry, why do we not grab it for the benefit of this country? That is why I would entreat all hon. Members of this
House to make sure that we pay particular attention to the bamboo industry, because Ghana has not yet unearthed all her potentials in all these areas. So if today, this tree that we once abandoned and saw as a no-go area is benefiting this country, then I seriously believe that we should pay attention to it.
Mr. Speaker, with these few words, I support the maker of the Statement.

Thank you, Mr. Speaker, for giving me the opportunity to contribute to this Statement.
Mr. Speaker, I share the sentiments expressed by the maker of the Statement and in doing so, I would like to draw attention to the industry itself as it pertains now, particularly in Accra. We have a number of sites where people who are working with bamboo have set up. But Mr. Speaker, these people are facing some real difficulties. I am sure hon. Members are aware that there is a whole group around Switchback Road, and a group between Tetteh-Quarshie Interchange and Achimota Junction. These people are on temporary lands; they have been evicted from their lands on several occasions, over the years, and the lack of a permanent site for these people has actually hindered the progress that they can make.
In my constituency, we have a group between Tetteh-Quarshie Interchange and Achimota doing very good work; and a number of young people are engaged in this type of work. In fact, the concern expressed by them is the fact that the several applications they have submitted over the years for assistance to secure a permanent site have not yielded the necessary result.
Mr. Speaker, we cannot really harness an industry where we do not have a place where they can be promoted. For instance, they cannot get a loan because whenever
they submit applications, they do not have any documents to back their sites. Therefore, Mr. Speaker, I am saying that we should take this bamboo and rattan industry seriously and make it one of the areas we can say is a tourist potential for Africa, where we can invest in the appropriate technology. For instance, we can look at the technology that will help in the processing chain.
One of the important factors for producing good quality bamboo products is the water content of the bamboo. You need to treat it so that you would have a consistent product that once you make it, it is not going to wear and therefore would not change shape. If we are going to promote a product we have to make sure that there is some quality assurance.
So I am appealing that firstly we need to identify this as a tourist potential and allocate to it a good site which is visible for tourists to come. Secondly, we have to invest in the quality of the products that are produced by supporting them with equipment that would help them treat the bamboo and also skills to refine the products so that the product they make would meet some international standards that would give us potential for export, thereby earning income for the country.
With these few words, Mr. Speaker, I associate myself with the Statement.
Nii Amasah Namoale (NDC - Dade Kotopon): Mr. Speaker, I would like to associate myself with the Statement on the floor.
Mr. Speaker, bamboo in Ghana has been underutilized. Why do I say so? If you go to the Central Region, driving along the Yamoransa-Kumasi road, looking at both sides, you will see bamboo in the wild. Mr. Speaker, if you consider all this poverty alleviation money that the
Government is pumping to places where we are not seeing any returns, Mr. Speaker, if we pump it into bamboo production or utilization, I believe we would get a very good result.
Mr. Speaker, in Ghana, we import large quantities of toothpick from China and other places. Mr. Speaker, toothpick is made from bamboo; the raw material for toothpick is bamboo and the cost of the machine to do toothpick is less than five hundred dollars.
Mr. Speaker, the Government has the database for the unemployed in Ghana; they registered them when they came to power. Mr. Speaker, the list is there. Why do they not bring them together and then import one toothpick machine, take it to Suame or wherever and fabricate it, for some Ghanaians to produce toothpicks so that at least, Ghana would be self- sufficient in toothpick production? Also Mr. Speaker, we are going to build a Presidential Palace, why can we not use bamboo to build it instead of importing some raw materials from outside?

Statement by Member of Parliament for Akropong.

Achievements, Roles and Prospects of Rural Community Banks

in Ghana

Deputy Minister for Defence (Mr. William Ofori Boafo): Mr. Speaker, thank you for calling upon me to make a Statement relating to the achievements, roles and prospects of Rural Community Banks in Ghana.

Mr. Speaker, in Ghana, about 70 per cent of the population live in the rural area

with agriculture, as the main occupation. Agriculture therefore requires institutional credit to play the expected meaningful role in the economy. The Central Bank in 1976, introduced the rural banking concept with the primary objective of mobilizing financial resources in the rural communities and further deploying them to support viable economic ventures.
Mr. Speaker, in pursuance of these objectives, rural banks therefore have been carrying out the following primary functions:
i. provide current, savings and time deposit accounts for its customers;
ii. provide finance for small-scale farmers, fishermen, merchants, industrialists and co-operative farmers resident in the area of operation.
Mr. Speaker, the first achievement of rural banking is the creation of banking habit for the catchment area population. The growth in rural banks has made rural financial intermediation a possibility and rural banks are now within the reach of people in various rural communities. Up to the year 2000, the paid-up capital of Rural Banks was ¢4.29 billion. Between 2001 and 2005 the paid-up capital increased to ¢43.52 billion -- a difference of ¢39.23 billion and a percentage increase of 914.45 per cent. With regard to investment, as at December 2000 it stood at ¢41.98 billion. Between year 2001 and 2005, the investments level had risen to ¢130.50 billion. There was an increase of ¢88.52 billion and in terms of percentage, 210.86 per cent.
Mr. Speaker, the second achievement is the mobilization of funds to ensure monetary stability. These funds would have been in the custody of individuals and/or perhaps could have been mis-

alocated or unutilized. Total deposits as at year 2000 was ¢207.14 billion. However, between 2001 and 2005 total deposits had increased to ¢1,415.66 billion. The rise in deposits was ¢1,244.52 billion and in percentage terms, 600.81 per cent.

Mr. Speaker, the amount which the banks invested in securities helped the Government to bridge the gap between its income and expenditure. Mr. Speaker, this is the third achievement.

Mr. Speaker, the bulk of the rural banks' mobilized funds are granted as loans and advances to agricultural sector activities and rural industries, largely to small-scale borrowers. It has contributed greatly to alleviating the rural populace of some of the harsh conditions, which normally govern credits from the informal sector. This is the fourth achievement.

Rural banks have provided funding for a number of development projects in some of the rural areas, such as electrification, borehole water supply, educational institutions, markets, community centres, lorry parks, health centres and others. These have facilitated speedy development and integration of the rural economy into the overall economic development process.

The rural/community banks have addressed the needs of women, particularly those in the rural areas since many of them engage in micro-business activities. The banks specifically have designed special schemes for women and these have contributed to the poverty reduction.

Mr. Speaker, up to December 2000 loans and advances granted amounted to ¢67.93 billion. Notably, between 2001and 2005, an amount of ¢748.86 billion had been released as loans and advances, showing a monetary increase of ¢680.93 billion and a percentage increase of 1002.40 per cent.

The rural banks have also provided employment avenues for a reasonable number of people.

Mr. Speaker, with only one rural bank established in 1976, as at end September 2005, the number of rural/community banks had grown to 121. Mr. Speaker, the performance analysis of Akuapem Rural Bank, in my constituency, that is Akropong constituency, shows remarkable improvement and calls for commendation. They are as follows:

Capital adequacy has been positive for the past 3 years. An average of 38 per cent was maintained which was 32 per cent in excess of required ratio.

Total assets rose from ¢24.6 billion to ¢44.7 billion from 2003 to 2005, representing an increase of 82 per cent.

Deposit increased from ¢16.7 billion in year 2003 to ¢31.2 billion as at close of 2005, thus a rise of 86.8 per cent.

Investments in Treasury Bills and notes rose by 110.7 per cent from ¢12.1 billion in 2003 to ¢25.5 billion as at end of 2005, yielding a total interest income of ¢12.25 billion over the same period.

The banks net worth also rose from ¢4.3 billion in year 2003 to ¢6.8 billion in 2005 resulting in a 58.6 per cent increase

Paid-up capital went up from ¢286.4 million in 2003 to ¢661.3 million as at end of 2005, an increase of ¢374.9 million over the period.

These, Mr. Speaker, are significant achievements.

In conclusion, Mr. Speaker, I wish to note the following:

Mr. Speaker, I wish to associate myself with this very well-made Statement on the progress made so far in the rural banking sector of our economy.
Mr. Speaker, there is no doubt in my mind that over the years the growth has led to a lot of positive things in various rural communities and one needs to commend the founding fathers of this concept, namely the Supreme Military Council (SMC) Government in the 1970s. This actually points to the fact that no government can be considered totally
useless. Every government introduces one initiative or the other that can stand the test of time so it is important for all of us to be modest with the introduction of new initiatives and not claim that they are the end of the world.
Mr. Speaker, in respect of the progress made by the rural banks, one needs to commend the association of rural banks. This body formed by various directors of the various rural banks has become a very forceful pressure group that has contributed enormously to the establishment of the APEX Bank and it is because of the availability of supervisory services from this APEX Bank that most of these banks have improved upon their performance.
Mr. Speaker, however, I wish to state that there are still a number of grey areas that affect the performance of rural banks. A cursory look at the balance sheet of most rural banks would point to a lot of bad debts because even in the rural areas the repayment of loans continue to be a problem. I believe that a mechanism needs to be worked out in the rural banking system for them to determine easier ways of looking at the creditworthiness of even the rural communities.
Mr. Speaker, in addition to this, the previous tax holiday that used to be granted to the rural banks has also been removed. I believe that if that tax holiday were reinstated it would lead to the availability of increased loanable funds for the rural banks to extend credit to a lot more people than they are currently doing. This is because the payment of taxes naturally reduces their working capital capacity.
Mr. Speaker, another area where I would like to ask for improvement is the various interest rates that these rural banks charge. One would have thought that they,

Mr. Speaker, one aspect of the rural banks that I would like to recommend to particularly the District Assemblies is the way the District Assemblies are handling the Poverty Alleviation Fund. It is my conviction that if all the funds available in the various District Assemblies were transferred to the rural banks for on-lending to community members, there would be more efficient lending programmes and the loan recovery would even be better than what is happening in the various District Assemblies at the moment. In addition to that the partisanship that has been introduced into the granting of the poverty alleviation loans could be reduced to a significant extent since beneficiaries would be evaluated on the basis of need and not on the basis of the particular political party they belong to. In a lot of the communities there is a lot of tension among members in respect of the discrimination that exists in the granting of loans from the Poverty Alleviation Fund by the District Assemblies.

Mr. Speaker, I believe that there is need for us to continue to train workers in the various rural banks because there are numerous examples of failed rural banks due to the fact that the level of training for their managers and staff has been so low, and there has been a large degree of corruption and embezzlement in the performance of some of the rural

banks. I am sure Mr. Speaker could point to a number of failure of rural banks in this country.

Overall, I believe that the establishment of the APEX Bank is doing a lot of good to rural banks in this country. And I would like to associate myself with the hon. Member who made the Statement for a Statement very well made.

Thank you, Mr. Speaker, for giving me the opportunity to make a short contribution to this wonderful Statement. It is indeed true that rural banks are doing very well. I am even surprised to know that among the so-called “Club 100” of Ghana there are as many as twenty- five rural banks named in there, which is an indicator of the fact that the rural banks have now become big businesses. Indeed, it is good that they should be big businesses and I want to encourage them to join the Ghana Stock Exchange so that their shares could be marketable on the Stock Exchange.
My hon. Colleague, Mr. Salia was talking about interest rates being too high. It is true that they charge interest, but it is because bad-debts are high. I therefore urge the rural banks to do proper study and credit appraisal so that their bad-debt levels would be reduced considerably. Interest rates are high because they are charging perhaps more than other commercial banks are charging. So it is proper that they should review this and get involved in granting poverty alleviation loans and so on, so that they would help reduce the tensions he talked about.
Mr. Speaker, millions have been mobilized by rural banks. Rural banks have used this to lend to all kinds of businesses.

Mr. Speaker, I rise to associate myself with the Statement made. But in doing so, I would like to differ on a number of issues. Mr. Speaker, rural banks were established to fill a vacuum that existed at the time of their establishment; that is, to give finances to rural economic activities like agriculture and fishing.
The first rural bank was established at Agona Nyakrom and it was a very popular bank at the time. But unfortunately, Mr. Speaker, the rural banks have strayed into the urban centres. Now, you go to big cities and you see agencies and branches of rural banks and therefore defeating the purposes for which they were established. In fact, the law establishing the rural banks limited them to their areas of jurisdiction. They have exceeded that and they are not lending to the agricultural sector; they are not lending to the rural economy; they are competing with commercial banks for business in the cities.
Mr. Speaker, if you go to the rural areas today, you will see that agriculture is very much starved of credit; and this was one of the reason why the rural banks were established. I want, Mr. Speaker, to call on the Bank of Ghana to review the activities of the rural banks and limit them to the areas for which they were established. Many rural people are still going to money lenders for credit because when they go
to rural banks they are asked to bring collateral.
Currently, in my constituency, the ¢100,000,000 which was provided by the APEX Bank for fishermen, fishmongers and small-scale farmers, they are being asked to bring civil servants whose salaries pass through the rural banks to act as guarantors. If you go to a village like Mempeasem in my area, there is no civil servant; how can the people then benefit from such lending facility?
Mr. Speaker, we establish so many institutions in this country with very good intentions but in operating these institutions we bring in so many obstacles that make the institutions useless. I am not saying the rural banks are useless but they are making things a bit difficult. So I call on the Bank of Ghana to have a second look at the rural banks, streamline their activities and limit them to the areas where they are supposed to operate; and stop them from straying into the cities to compete for businesses which the commercial banks can better handle.
Capt. Nkrabeah Effah-Dartey (retd) (NPP - Berekum): Thank you, Mr. Speaker, for the opportunity to contribute to this Statement. Mr. Speaker, I think that the rural bank concept is a kind of business transaction which all of us must encourage. As my hon. Colleagues have previously remarked, the rural bank concept was introduced to fill a vacuum. We have the leading financial institutions, the big banks staying in Accra, the regional capitals and the district capitals doing big business.
But we have the ordinary people, the ordinary cocoa farmers, the ordinary fishermen, the ordinary cashew-nut farmers, the ordinary cassava farmers, the school teachers; these are people, Mr.
Speaker, who rely on Susu collectors, who rely on credit givers; and almost always they find themselves in very difficult situations. That is why the rural bank concept was introduced.
It is true that over the years, they have chalked a lot of successes and I join my hon. Colleagues in praising them. But at the same time, Mr. Speaker, as my hon. Colleague from Jomoro said, we must go back to the roots and find out whether indeed the rural banks are satisfying the very reasons for which they were established.
Right now, as I speak -- my hon. Colleague mentioned that the total number of rural banks in Ghana is about 121 or 129, but we have more than three hundred major rural centres in Ghana. So what happens to those rural areas? How do they get banking facilities?

Mr. Speaker, apart from that when you look at the track record of almost all the rural banks, you would see that it is only those banks which have up-and-doing Board of Governors which are doing well. Some of the banks are just wallowing, giving all manner of uncontrolled credits, all manner of allowances, and all manner of risks that they take, resulting in some of the rural banks still wallowing under the belt. Mr. Speaker, I think that the hon. Member who made the Statement has hit the nail right on the head when he mentioned the need for us to take a second look at the rural banks.

Mr. Speaker, I would recommend

strongly that the Central Bank should concentrate more on making sure that we open rural banks in the rural areas, at the rural centres, in places where there are people who need money for business but are not getting them; that is where the rural banks need to operate.

Secondly, Mr. Speaker, as the hon. Member for Jirapa (Mr. Edward Salia) said, the District Assemblies have a duty to support the rural banks. It is not enough just passing the Poverty Alleviation Fund through the rural banks. I would recommend that the District Assemblies should see the rural banks as their vehicles of development.
This is because, in fact, Mr. Speaker, I think all would agree that in the advanced economies, it is the banks which drive investments; it is the banks which mobilize resources and invest in businesses. Over here in Ghana, it is almost a different story. The banks are sitting in Accra, just mobilizing resources and just adding interest upon interest and then we are groping in darkness. Mr. Speaker, I think that this situation should be reversed and I think the Central Bank can help a lot if they get the rural banks encouraged to operate in this area.
Finally, Mr. Speaker, I think that we
should take a second look at the quality of management of the various rural banks. And in this regard, I think it would help a lot if graduates from our various polytechnics and universities, especially those in the financial institutions, can be sent there both as national service personnel and also for permanent jobs to make sure that when you take your money to the rural bank, it would be safe and you can trust them for recovery.
Mr. Speaker, with these few words, I want to associate myself with the Statement.
Mr. Michael Teye Nyaunu (NDC -
Lower Manya): Mr. Speaker, thank you very much for the opportunity. I wish to associate myself with the Statement on the floor.

[CAPT. EFFAH-DARTEY (RETD)] Mr. Speaker, a lot has been said about the functions of the rural banks and the role that they are playing in the financial sector of this economy. Mr. Speaker, I wish to put on record that it looks like the rural banks are not getting the necessary support for them to be as viable as we are looking up to them to be. Mr. Speaker, I am saying this because currently the banking environment has become very competitive and their rates are being fluctuated up and down.

Mr. Speaker, I am saying this because I look at the Central Government sending big chunks of monies through the old, traditional, established banks and not regarding the rural banks. Mr. Speaker, a typical example is the District Assembly Common Fund which goes through a bigger traditional bank like the National Investment Bank, but when the District Assemblies or the Metropolitan Assemblies need funds they rush to the rural banks for assistance. I think that since it is a competitive environment, the Central Government should also recognize and channel these funds to them. And I think that would erase the negative perception that the rural banks are not capable of managing those funds.

Mr. Speaker, I would also want to put

on record that, like the hon. Colleague who just contributed said, it looks as if we doubt the capacity of the rural banks now. Mr. Speaker, I have been a member of the Manya Krobo Rural Bank Board of Directors for the past thirteen years and I can tell him on authority that we are underrating or underestimating the capacity of the management and staff of the rural banks and it has been affecting these banks.

Currently, we have Managing Directors with second degrees in charge of these rural banks. A lot of them have moved from the bigger banks and have taken

over this area. A lot of the banks have now become computerized and they are giving services like any other bank in the country. So I think that we should not try to say that they do not have the capacity; they have the capacity. We should try to trust them and by doing that we would encourage them and people would do business with them.

Mr. Speaker, I would also want to put on

record that the rural banks have not been established as charitable organizations. Mr. Speaker, they are also profit-oriented and they are in for business. As such, that over-restriction on them -- Some people say that they must be limited to the rural areas. Mr. Speaker, what is the sense of doing business without making profits? What is the sense in trying to invest money in very high- risk areas?

Agriculture, we know in this country, is rain-fed. Mr. Speaker, when a farmer goes for a loan and then the weather fails, the rain does not fall as it is expected, definitely, the farmer would not be in a position to pay the loan. So if we are telling the rural banks to be limited to where they are supposed to operate -- agriculture and all those things -- then what are we trying to do? Are we trying to kill them moribund or what?

I think it is about time we tried to view these rural banks from a very positive perspective, realistic view. We should consider the present environment and give them the needed support. I think by so doing we are going to improve upon our financial sector as well.

Mr. Speaker, thank you very much for

the opportunity.

Mr. Simon Osei-Mensah (NPP

-- Bosomtwe): Mr. Speaker, the performance of rural banks in this country actually needs a lot of commendation.

That notwithstanding, there are a lot of problems also facing these rural banks. Mr. Speaker, in the last Club 100 rating, about twelve rural banks were nominated. Fortunately, and coincidentally my rural bank was the best rural community bank in the country; we placed forty-ninth - [Hear! Hear!] And I am happy to be the board chairman of the rural bank, which bears the same name of my constituency.

Mr. Speaker, what I realize is that

most of these rural banks are faced with a number of challenges. The major challenge, currently, is the declining interest rates, which requires an efficient management of the loan portfolio as well as the funds available to the various rural banks. Mr. Speaker, formerly when Treasury Bills or Government Securities attracted high interest rates of around 30 per cent, 40 per cent, most of these rural banks could only lodge most of their funds in Treasury Bills and could make it at the end of the year. The situation has changed drastically. Now, 91-Day Treasury Bills is around 9 per cent. With this, it means that even the spread or the margin between lending rates and deposit rates is dwindling. This requires efficient utilization of the funds available.

Also, it requires that there should be diversification of their investments. Now, rural banks should shift from this banking practice of just investing in Treasury Bills to granting of loans and advances, and not just loans but quality loans.

One problem that has resulted in most of the rural banks having huge non- performing assets in terms of loans on their balance sheets is that most of the appraisals are based on only ability to pay without the willingness to pay. One major problem with the payment of loans in the rural areas is the lack of the willingness of customers to pay for the loans. And most of these project appraisal processes rely solely on the ability of the customer to

pay. But we know we have some people, who may have all the money on this earth but will fail to pay for the loan: this is characteristic of most of the people in the rural areas.

Mr. Speaker, with these challenges in sight, it means that management should be very effective and efficient. The cost- control measures in the system should be very effective; the quality of the assets of the company should be very high and they have to reduce the defaulting rates. Mr. Speaker, these require that the executive management of all the banks should be well-balanced in terms of quality, that is, experience and educational background. They should have people who are accountants, bankers; they should have lawyers, auditors and so on and so forth so that at the Board meetings they can discuss issues objectively and then move these banks forward.

Mr. Speaker, again management should

also be efficient, especially when it comes to management of the credit and then the funds. If they leave a lot of idle funds in their votes it is a loss to the banks because while the money will be sitting in the vote, attracting no income to the bank, at the same time they will be paying interest to the depositors.

Also it requires that there should be diversification of the loan portfolio. One, if they concentrate all their funds in one economic area, let us say agriculture, and that year if the rains or the conditions should fail the bank then it will mean that there would be a lot of losses to the banks because they cannot even recover the principal, they cannot also recover the interest that is going to give them income, and at the end of the day the banks are likely to make huge losses.

Thank you very much, Mr. Speaker, for the opportunity to comment on this Statement. A lot has been said already about the performance of the rural banks. Mr. Speaker, mine are a few suggestions.
If you look at the operations of the rural banks it is very true that most of them have left their core purpose of staying in the rural ends and are in the urban centres. I would suggest that one easy way of mobilizing resources is for the rural banks to adopt money-cashing centres. For example, if you go to cocoa-growing centers like Boso-Nkwanta, Juabeso, Assem, you will realize that there are only Agricultural Development Bank (ADB) branches that are very active in most of the busy centres.
These areas have market centres that have weekly markets days and a lot of the rural people troop in there to trade so if these rural banks could establish money-cashing centres so that once you are saving with them you can be assured that once in a week your bank would be located at the market centre where you can withdraw or deposit money, it is going to help the rural banks to be able to mobilize a lot of resources.
Another area that the rural banks
have paid deaf ears to or have not paid much attention to is mobile banking. When you look at our rural set-up, the area is so vast that if you have even one branch at a particular location it becomes very difficult for a lot of the rural folks to access the bank. But if rural banks could make it a duty to use the mobile banking where they go round with their
bullion so that at places where they know there are a lot of rural people they could deposit or withdraw whilst the van is going round, it could help tremendously in raising or mobilizing a lot of resources and encouraging our rural folk to deposit with them.
Mr. Speaker, one other thing that affects
the operations of the rural banks is the way institutions and embassies behave. When they need statements or you tell them that you have an account with a rural bank and therefore you are bringing the statement, they look down upon the statements that are coming from the rural ends - the embassies and the big institutions. I think as a country we must sit up; after twenty years of operating the rural banks it is important that the embassies and other big institutions begin to accept statements and bank transactions from the rural banks. This is the only way we can encourage the rural banks to grow.
With these few words I support the hon. Member who made the Statement.
Mr. E. Nana Yaw Ofori-Kuragu
(NPP - Bosome-Freho): Thank you, Mr. Speaker, for giving me the opportunity to contribute to the Statement on rural banks so ably delivered by the Deputy Minister. Mr. Speaker, I would like to use the opportunity to call on the Bank of Ghana to take a second look at the actual stated capital required for people to start or initiate rural banks. Mr. Speaker, I believe it is around five hundred million cedis at the moment. This makes it extremely difficult for people to raise money to start rural banks.
Mr. Speaker, rural banks are for people in the rural areas and if this amount remains high, like my hon. Colleagues have already said, we shall not be able to increase the number from one hundred and twenty-one to maybe the three hundred or so rural banks needed in the economy.
Secondly, I would like to commend the Association of Rural Banks for instilling confidence and integrity in the rural banking system. Mr. Speaker, once upon a time rural banks were frowned upon by many rural folks but now it looks as if they are slowly cultivating a saving culture. Mr. Speaker, rural folks are beginning to understand that once they buy shares in rural banks they become owners of the banks and can participate in the running of these banks. Mr. Speaker, rural banks have enormous potential and the advantages are huge -- employment, as already said, local development, poverty alleviation, to name a few. Mr. Speaker, even churches are now investing in rural banks. Let us encourage our folks and the informal sector to put their money in rural banks.
Mr. Speaker, lastly, I would like to
urge rural banks themselves to try and computerize some of their systems, especially in the areas where there is electricity because gone are the days when people used to sign passbooks and so on and so forth.
Mr. Speaker, with these few words I would like to thank the hon. Member who made the Statement.
Deputy Minister for Finance and
Economic Planning (Dr. A. Akoto Osei:): Mr. Speaker, I just want to add a few words to what my hon. Colleagues have already said. I think there have been a lot of messages that hon. Members want to be conveyed to the Bank of Ghana, and I assure them that I will convey these messages. What I am surprised about is that most hon. Members have talked about this issue without anybody mentioning the APEX Banks' name. Everybody said the Bank of Ghana - [Interruption] -- I know that originally it was the Bank of
Ghana but now it is the APEX Banks that are doing the work.
Mr. Speaker, a lot has been said about their performance and what needs to be done to improve it so I will not add much, except, Mr. Speaker, on this occasion, I want hon. Members to know that today is the 60th birthday of hon. E.T. Mensah -- [Hear! Hear!] So with those few words, Mr. Speaker, I support the Statement.

Mr. Speaker, I beg
to move that we adjourn proceedings to tomorrow at 10 o'clock so that committees may start sitting from now.

Hon. Minority Leader, are you seconding the motion?

Where are your
people -- [Pause] -- Mr. Speaker, I was just asking my hon. Colleague opposite where his people were. The Ministers for Finance and Economic Planning and the rest, I just wanted to ask where they were on the floor.

Mr. Speaker, the
Papers have been laid.

Hon. Minority Leader,
there is a motion on the floor and are you seconding the motion?

Mr. Speaker, well, I can
see that the information is not very crucial to all of you so I second the motion.
Question put and motion agreed to.