The Bank of Ghana’s decision to appoint Nigerian non-interest finance specialist Professor Bashir Aliyu Umar to chair its newly inaugurated advisory structure for non-interest banking has added a new layer of scrutiny to the central bank’s push to establish the sector in Ghana.
Umar brings extensive experience in non-interest banking, having previously served as Special Adviser on Non-Interest Banking to the Governor of the Central Bank of Nigeria. However, his appointment has sparked questions in some quarters over the decision to look outside Ghana for an expert to lead a committee that will help shape an emerging segment of the country’s financial system.
“We had to look outside Ghana to appoint a Nigerian expert with experience in Sharia-compliant finance to chair a committee overseeing an important aspect of our banking system. Why was this approach considered necessary, and what does it say about the level of local expertise available in Ghana?” a Ghanaian citizen said on condition of anonymity.
The appointment comes as the BoG moves from policy development to implementation of its non-interest banking framework. The central bank published its Guidelines for the Regulation and Supervision of Non-Interest Banking in January, paving the way for institutions to apply for licences.
In May, Governor Johnson Asiama said one indigenous bank had formally applied for a licence, while four others were preparing applications.
The Non-Interest Financial Advisory Council (NIFAC) will advise the BoG on the regulation and supervision of non-interest banking institutions and review products proposed by operators. That makes the leadership of the council significant as Ghana prepares to admit its first non-interest banking institutions.
Umar’s credentials provide a clear rationale for his selection. He served as Special Adviser on Non-Interest Banking to former CBN Governor Sanusi Lamido Sanusi from 2010 to 2014, during Nigeria’s development of its non-interest banking framework. He has also served on Islamic finance and Shariah advisory bodies and is an Associate Professor of Islamic Studies at Bayero University, Kano.
Nigeria’s experience is particularly relevant because it faced public resistance when non-interest banking was introduced, including concerns about its religious implications. Regulators subsequently adopted the broader term “non-interest banking” and structured the system to serve customers regardless of religion.
Ghana’s framework similarly presents non-interest banking as an alternative financial model rather than a religious banking system.
The BoG’s framework requires expertise in non-interest banking, International Financial Reporting Standards, Islamic Financial Services Board and The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as well as Basel standards. It also requires the relevant advisory structures to include Ghanaian representation.
The controversy, therefore, is less about whether Umar possesses the technical credentials and more about whether Ghana is developing sufficient domestic expertise to support a financial model it intends to regulate locally.
Non-interest banking could broaden financing options for businesses and households through structures such as asset-backed financing, leasing and profit-and-loss sharing. The model could also create opportunities for new financial products and potentially attract investors seeking Sharia-compliant assets.
But the BoG will need to manage the rollout carefully. The framework has already generated debate over issues including its regulatory architecture, tax treatment, liquidity management and reliance on international Shariah standards.
As Ghana moves closer to welcoming its first non-interest bank, the BoG will need to ensure that the framework works for Ghana’s financial system while building the local expertise needed to support the new sector.
