A finance expert and an Advisor to the Bank of Ghana has corrected a misconception and misinformation spreading across the country that non-interest banking or as others call it, Islamic banking if introduced in Ghana will collapse the conventional banks.
The expert emphasized that rather, non-interest banking will achieve economies of scale, financial inclusion, diversification in financing trade and commerce, as well as secure project finance for government and the private sectors of the economy.
Currently, among the West African countries, only Ghana is not implementing the non-interest banking and finance systems, which has really hurt Ghana’s economy in many ways.
According to the World Bank, the Islamic finance industry has expanded rapidly over the past decade, growing at 10-12% annually. Today, Sharia-compliant financial assets are estimated at roughly US$2 trillion, covering bank and non-bank financial institutions, capital markets, money markets and insurance (“Takaful”). It is in line of these development that, the current government has shown commitment to rollout Islamic finance in Ghana.
“The apprehension that Islamic finance and banking will negatively affect conventional banks in the country is not rooted in progressive information widely available to regulators globally”, Professor John Gatsi has said in an interview last week.
“Furthermore, non-interest banking and finance will provide unique support to women entrepreneurs and contribute to achieving the Sustainable Development Goals.”
Many experts have asserted that, non-interest banking and finance will enhance Ghana’s market economic structure.
The non-interest finance system is not designed to outperform conventional structures because it is not a competitor but plays crucial complementary roles in municipal, central government, and private sectors’ infrastructure and enterprise funding.
“We have non-interest banking (Islamic banks) and capital markets institutions, including fintech companies in the UK, Saudi Arabia, Dubai, Turkey, Japan, Canada, France, Netherlands, Nigeria, Uganda, Hong Kong, Singapore, Luxembourg, America, Malaysia, to name a few. However, these institutions have not even competed with conventional banks, let alone dismantled them” Professor Gatsi pointed out.
