Finance Minister, Mr Kwadwo Baah-Wiredu, has said that with the phasing out of the rural financial services project, all forms of financial support to the ARB APEX Bank will cease at the end of the year.
“Furthermore, as from 2009, the tax holiday facility granted the bank will also expire,”. The Finance Minister dropped the hint at the 5th Annual General Meeting (AGM) of the ARB APEX Bank in Accra at the weekend and reminded the board of the need to allow these challenges which includes the inability of the bank to fully recover the cost of services it renders to the rural and community banks (RCBs) to engage its attention next year.
The bank recorded a 60.3 per cent drop in profit after tax having realised ¢2.726 billion (Gh¢272,600) as of the end of 2006 as against ¢6.867 billion (Gh¢686,700) in 2005.
However, total deposits amounted to ¢341.548 billion (Gh¢34,154,800) as against ¢283.172 billion (Gh¢28,317,200) in 2005, representing an increase of 20.6 per cent while total assets also rose to ¢473.834 billion (Gh¢47,383,400) from ¢369.977 billion (Gh¢36,997,700) in 2005.
Mr Baah-Wiredu noted that the year under review was a difficult one for all banks as a result of the instability in the price of crude oil and the rising energy prices and urged the bank to allow these challenges to inspire them to position themselves to be able to remain in the market.
He mentioned the request made by the bank for the release of ¢100 billion (Gh¢10,000,000) to re-capitalise the bank and gave the assurance that “your request is receiving the needed attention”.
The Finance Minister urged the bank to assist the RCB in the country to enable them to hasten the development of the agricultural sector.
According to him, the government had noticed with concern the decreasing flow of credit to the sector and noted that support from the bank for agricultural activities would complement the government's effort at achieving food security as well as improve growth in incomes.
Mr Baah-Wiredu said “the lack of access to credit for key activities such as farming, fishing, livestock and needed ancillary services and infrastructure has been drag on productivity growth and incomes in the sector”.
He said to address these, a number of measures would be introduced in the course of next year adding that “the objective of these measures would be to ensure that viable projects in the sector are fully funded”.
Mr Baah-Wiredu said the success of any RCB should be measured by the level of financial empowerment of the people in the catchment area and the extent to which unemployment and poverty may be perceived to have been reduced.
“To this end, RCBs are urged to extend modest facilities to the small enterprises and petty traders such as koko sellers, groundnut sellers, kenkey sellers among others,” he added.
Mr Baah-Wiredu further urged them to monitor the facilities granted to these traders to ensure repayment, “by so doing, the RCBs will be playing a very useful role in partnering with the government to open up the rural economy for rapid growth and poverty reduction.”
Presenting the annual report of the bank to the shareholders,the Chairman of the bank, Dr Samuel Dufu, among other things, attributed the low profit to growth in the expenditure over income as well as the expansion programmes during the year under review.
“Without pre-empting the financial results for 2007, I wish to state that, the strategies for 2007, are, however yielding positive results; the downward trend in profitability has been reversed and I am happy to inform you that as of September 2007, profit before tax recorded by the bank stood at ¢7.55 billion,” he announced.
On services rendered to the RCBs, he said a study conducted by some consultants had revealed that the bank would only be sustainable if it was able to move into full cost recovery as quickly as possible.
Dr Dufu described the situation as a big challenge to the RCBs to as a matter of necessity, start considering paying the full cost for services received.
— Story by Charles Benoni Okine