ATLANTA, Georgia – The Central Bank of Liberia, in collaboration with Afriland First Bank, have announced their support for a new community bank in Tappita, Nimba County.

Over the past several years, the Central Bank has been planting smaller community banks in rural villages under the direction of the Rural Community Finance Institutions initiative.

Recently, Tappita, which lacks any banking institutions, was identified as a prime location for one of the next community banks to be established.

The initiative for the Tappita community bank has been in the fundraising stage for over a month, according to Sam Kpahn, Executive Director of the Tappita District Development Association. Kpahn shared details of the fundraising process and status of the project during an interview with The Bush Chicken.

While bank development in rural areas of Liberia is not necessarily a new endeavor, he said this one will be unique because the Tappita District Development Association will place ownership of the bank in the hands of the citizens, rather than a few wealthy investors, as is common practice in Liberia.

To achieve this, they need to raise US$50,000 in start-up investment capital which they are selling as US$5 bank shares.

“The new Liberia that is being rebuilt should be restructured by the citizens, and this initiative is a great first step towards that,” Kpahn said. “We need to start investing in ourselves and in our people. We hope that all of the other communities of the country and its citizens abroad will follow and engage others to get involved with people in their towns to help to improve the standard of living for all communities of Liberia.”

Tappita’s community bank will be modeled similarly to a credit union, which are owned by the depositors and shareholders. This would be the first government-backed bank in Liberia, primarily financed by former Tappita residents in the diaspora.

The credit union structure grants shareholders the leverage to influence certain lending standards and bank practices. Potential investors can expect their deposits to yield returns after the first year, but the seed money will not be available for withdrawal for at least two years.

Afriland First Bank has required a financial commitment of US$50,000, and in return, it will ensure that the bank is run properly and to professional standards. Any funds for the bank facility and structure improvements are expected to be provided by the Central Bank along with staffing costs for the first year.

A committee comprised of members of the Tappita District Development Association are driving the fundraising initiative. Kpahn said that approximately US$60,000 had been pledged towards the community bank to date, but additional commitments are still needed to ensure the financial commitment of US$50,000 is raised.

While the deadline for raising the US$50,000 for the initial financial commitment is the second week of May, for a June opening for the bank, When asked about any delays in the completion of the project if the US$50,000 commitment is not raised, Kpahn said that an accommodation has been granted by the Central Bank of Liberia to contribute the difference as a grant or loan.

Plans are also underway to start an investment group with the initial set of investors for future projects. The bank will be located in an existing brick and mortar structure that has already been assessed and approved via feasibility study.

 Featured image courtesy of Chuck Moravec