Islamic Finance: an Alternative for Government Financing
Adnan Adams Mohammed
Prof. John Gatsi in his unrelenting advocacy has indicated that the desire to introduce Islamic banking in Ghana is closer as stakeholders have gained enhanced knowledge about alternative banking.
He explained that as the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) does not support Islamic banking in its current form, it needs some changes if Ghana has to introduce Islamic banking as an alternative to traditional banking in the country.
Speaking at an Islamic banking forum organized in Accra by the Islamic Finance Research Institute of Ghana, Prof Gatsi noted that among the stakeholders, the Bank of Ghana, Securities and Exchange Commission (SEC), National Insurance Commission and other religious groups have to understand the principles of Islamic banking within a secular democracy.
“The fact that a political party has clearly stated this alternative banking in its manifesto for the 2020 elections means the principle has become even important to achieving financial products diversity, inclusion and alternative financing of government projects and businesses”, the Dean of Business School at UCC posited. To him, “this also requires more stakeholder engagement to provide clear understanding to all stakeholders within the financial sector and the general public.”
Prof. Gatsi advised that since Islamic financial products provide alternative access to business funding, Shariah board membership should be structured to include non-Muslims to remove fears which may not be founded. The board membership ought to be people with expertise in Islamic banking including non-Muslims.
He asked the regulatory institutions such as Bank of Ghana, SEC, NIC to accept the fact that the interest and prospects of this alternative financing model and show a regulatory and capacity building framework. He added that discussing Islamic banking in line with Ghana’s secular democratic values will be a welcome development. He therefore asked the regulatory bodies to own the roadmap and work with institutions interested in Islamic banking.
Prof. Gatsi also explained how Islamic banking may support joint ventureships, partnerships and project finance. He advised Muslims not to scale up their micro-level Islamic banking products without regulatory blessing. He finally advised those calling for Islamic banking products not to discuss the subject as a superior proposal to conventional banking and financial system but as an alternative to deepen financial inclusion and financial products diversification with choices.