This case study describes the historyand business model of the Rural and Community Bank (RCB)network in Ghana, analyzes its performance, identifies keyissues, and makes recommendations on the way forward. Thestudy analyzes the service delivery and financialperformance of the RCBs. Before the establishment of RCBs inthe late 1970s and the subsequent expansion of other serviceproviders into rural areas, access to institutional creditfor farm and nonfarm activities was scarce. The main sourcesof credit were moneylenders and traders that charged veryhigh interest rates. In many rural communities, secure,safe, and convenient savings and payment facilities hardlyexisted. The first RCB was established in a farmingcommunity in the central region of Ghana in 1976. Ruralcommunities showed tremendous interested in the communityownership and management features of RCBs, and by 1984 thenumber of RCBs reached 106. The introduction of a checkpayment system for cocoa farmers also spurred theestablishment of local banks in many communities. Thefinancial performance of many RCBs started to decline,however, for several reasons, including a drought thataffected the country in 1983, weak governing ability,conflicts within boards of directors, and ineffectivemanagement in many RCBs. By the end of 2008, 127 RCBs werein operation with a total 584 service outlets. RCBs areregulated by Ghana's central bank, the Bank of Ghana,and thereby form part of the country's regulatedfinancial sector. RCBs are the largest providers of formalfinancial services in rural areas and represent about halfof the total banking outlets in Ghana.
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