Financial Institutions And Agricultural Financing In Ghana: The Case Of The Ghana Commercial Bank -1953 – 1994

ABSTRACT The British Bank of West Africa (B.B.W.A) now renamed Standard Chartered Bank Limited and Barclays Bank Ghana Limited were the two prominent foreign Commercial Banks first established in the Gold Coast in 1897 and 1917 respectively. In the colonial era, these British banks did not cater to their banking needs; they dealt with large businesses and did not extend credit to Ghanaian farmers. In 1953, the Commercial Bank was established as the first indigenous commercial bank to serve the people of the nation. Since 1953, the Ghana Commercial Bank has made agriculture financing its priority and has extended loans to its agricultural customers. How well the Ghana Commercial Bank has performed in extending credit to farmers in Ghana and the impact of the credit on this group of farmers and the economy are the basis for this study. The various approaches the bank adopted to support agriculture in Ghana are addressed and the benefits the bank and its loan beneficiaries derived from the bank‘s agricultural policies are also spelt out. In addition, it was observed that the high rate of default among some farmers as a result of the lax collection procedures of the bank has seriously affected the liquidity and performance of the institution, while the complicated procedures in loan application, approval and disbursement contributed to the inefficient utilization of the credit extended to the farmers. Based on the findings of the study, it is recommended that the amount of credit available to small-scale farmers should be increased and disbursed promptly to ensure an optimal utilization of the input. Also, for increased liquidity and for the bank to become self-sufficient, it should improve its loan recovery procedure and make desperate efforts to stem the high rate of default that has seriously affected the performance of the bank. The study observed that though the bank supported successive governments‘ agricultural policies, its contribution towards the general agriculture performance in Ghana was not adequate.