The document summarizes the evolution of rural financial services in Ghana over three phases: 1) Prior to 1990, the informal financial sector dominated due to lack of regulation and limited state interventions. IFAD introduced SCIMP to build confidence in formal banking. 2) From 1990-2000, RFSP upscaled SCIMP nationwide, achieving sustainability, innovation and increased rural bank numbers. Challenges included low farmer lending and contradicting subsidy approaches. 3) Post-2010, RAFIP continues RFSP's work while disengaging from credit lines and building capacity. Knowledge from failures in Cameroon and Niger informed expanding successful models to Nigeria.

1. WCA Sustainable Rural Financial Services in Ghana
Where we started Phase One: Pilot-Testing with SCIMP
1
 Prior to 1990  Susu
collectors, ROSCAs, traders, money
Informal financial sector
 Dominance of unregulated
lenders, and families:
informal credit arrangements.
 Large and disparate;
 State-controlled financial
 Individual units are very small with
sector. limited profitability and little impact;
 Earlier interventions were:  Low asset base, unsustainable
 Fragmented in location; savings mobilisation, and lending at
high interest rates;
 Limited in scope.
 Trusted by smallholders, thanks to
 1990 – 2000 community-based, flexibility, and
minimum collateral requirements.
 IFAD experience with SCIMP:
 Modified unit banking system
Rural banking
 Build up of rural poor’s
tailored to specific needs of rural
system
confidence on formal banking;
communities;
 Bridging large informal financial
 Institutional, operational, regulatory,
sector, rural banks, and the
and financial constraints.
formal financial sector.

2. WCA Sustainable Rural Financial Services in Ghana
Where we are Phase Two: Nationwide Scaling-Up with RFSP
2
 2000 – 2010
 Strategic focus up-scaled from SCIMP to countrywide project RFSP
intervening at macro, meso, and micro levels:
 Easy access by the rural poor; responsive to their specific needs; and sustainable.
Sustainability Innovation Lessons learned - challenges
6% RoE by 2007 Rural Banking
Major achievements of RFSP
 Improvement of access to lending
80% of rural banks Introduced tailored
products by small-scale farmers below
are profitable. financial products.
expectation, in spite of the increased
saving;
Growth Efficiency
 Contradiction between IFAD’s
133 rural banks Mergers
matching-grant approach (smart
Increased from 115 in Increased mergers
subsidy) and the Government’s
2002. among rural banks.
continued pursuance of subsidized
interest rate programmes;
Competency Governance
Upgraded National Policy  Insufficient pilot-testing;
Standards of regulatory for microfinance  Co-financiers’ tendency to upscale on
bodies enhanced. developed. its own (AfDB and the Bank).

3. WCA Sustainable Rural Financial Services in Ghana
What is next Phase Three: Continuation and Replication
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Replication in WCA
 2010 and on…
 IFAD launched  Unsuccessful replication:
RAFIP, successor of RFSP  Insufficient pilot-testing and
Cameroon, Niger
preserving the good features straight to nationwide programme
led to many challenges;
and capitalizing on the 20-
years of experience:  Low demand of the Government
and continued emphasis on credit
 Specific purpose for financing interest subsidy;
agricultural value chains;
 Poor governance;
 Complementary to two ongoing
agricultural value chains and one  Low population density (Niger);
rural enterprise programmes;
Senegal, Nigeria
 Knowledge management served
 Disengagement from credit lines;
for:
 Capacity building of Apex Bank
 Decision not to replicate in Senegal
and rural banks to concretize
in 2004;
their coordinating role.
 Replication and expansion of RFSP
features to RUFIN in Nigeria.