The issue of Islamic finance in Ghana needs to be critically pursued by all stakeholders as a key alternative financing method for government and private sector players.

This was the unanimous view by a panel of experts at the maiden Islamic finance forum, IFF; which took place in Accra on November 7, 2020. The forum was under the auspices of an Accra-based research outfit, the Islamic Finance Research Institute of Ghana, IFRIG.

Two professors, a banker, an interest-free banking advocate and a financial inclusion expert; stressed the importance of interest-free banking in their submissions during a panel discussion moderated by Citi FM’s Umaru Sanda Amadu.

Prof Gatsi’s interest-free “masterclass”

Prof John Gatsi of the University of Cape Coast during his presentation emphasized that a major political party including interest-free banking in its 2020 manifesto, was a big testament to how far the gospel of Islamic banking had come.

“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.

He added that despite current banking regulations making room for some category of interest-free banking, they remained unsuited for rolling out fully-fledged interest-free outfits. The
Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) does not support Islamic banking in its current form, he averred.

He cited a multi stakeholder approach as the best way forward. “…this also requires more stakeholder engagement to provide clear understanding to all stakeholders within the financial sector and the general public,” he said.

Accordingly, he called on major regulators like the Bank of Ghana, Securities and Exchange Commission (SEC) and the National Insurance Commission to be open and liaise with relevant civil society and financial inclusion outlets to achieve what he called a viable alternative to conventional banking system.

Other guests on prospects and challenges

A fellow professor, Naail Mohammed Kamil Dangigala, of the KNUST School of Business, for his part stressed the need for civil society and interest-free banking enthusiasts to keep up with the advocacy and planning efforts, with an eye on critical area of policy changes.

He disclosed that KNUST had for the first time rolled out a short course on Islamic Banking and Finance. According to him, such initiatives are crucial to opening up the interest-free banking landscape especially to officers in the regulatory sector.

Other panellists who shared their views on the prospects and challenges the sector faces included Hajia Amina Sammo, a financial literacy campaigner, Hajj Abubakar Essuman, Human Resource chief at the Bank Of Africa and Fawzi Muhammad, director of GM Ambassadors.

Sharing the Nigerian experience

Joining from Nigeria, Attahiru Maccido, a leading light in Islamic finance and fund management; shared practical experiences on how his country has rolled out infrastructure bonds – Sukuk – and how impactful and receptive these bonds have been.

He emphasized the role that sukuk has had in development drive of government. “The federal government of Nigeria came to raise sukuk in order to bridge the gap of infrastructural deficit that we have.

“Just the most recent one, which was in June (2020), federal government came to raise 150 billion naira in order to build about 44 roads in all the regions in Nigeria; in order to bridge the gap of infrastructure for seven years,” he added.

He pointed that the most recent bond was hugely oversubscribed with over 660 million naira raised, forcing government to return over half a billion naira to potential investors.

Maiden IFF and way forward

The 2020 Islamic Finance Forum, IFF, is the latest push to sow the seeds for alternative banking. Its main aims being part of advocacy for Islamic banking and finance whiles looking to consolidate small but significant steps taken years ago in that space.

Shaibu Ali, IFRIG director expressed satisfaction at how the event went. For him, it was a major take off for the institute’s advocacy efforts.

“The institute has published a number of research works, but IFF 2020 and how it has gone has set the stage for other crucial steps – from education, publicity, liaising with regulators and crucially, the area of policy push.”

IFRIG’s main collaborators were the Islamic University College, Ghana (IUCG) and the Madina Institute of Science and Technology (MIST).