President John Dramani Mahama is set to hit the ground running with his promise to introduce Islamic Banking instruments in Ghana’s financial system.
A few days after assuming office, President Mahama has announced that his administration is on an agenda to engage the country’s financial sector regulator, the Bank of Ghana to map out plans for the implementation.
Mr. Mahama made this announcement at a National Muslim Prayer and Thanksgiving last Friday in Accra.
“We also promised to introduce Islamic Banking instruments in Ghana. We will begin the discussions with the Bank of Ghana on how we introduce Islamic Banking Instruments into our banking financial system,” the President announced.
Experts say Islamic Banking is very different from conventional banking. This type of banking is based on the principles of Islamic Sharia law which doesn’t focus on interest to generate wealth and sustain the business.
It rather uses investments and financing tools to share profits and losses with customers.
One champion for the introduction of Islamic Banking in Ghana is the Dean of the University of Cape Coast Business School, Prof. John Gatsi. The finance professor believes that given the interest-free nature of Islamic Banking, it is the most appropriate financial system to support Ghana’s socio-economic development.
He says this form of banking is best suited for Ghana’s situation where huge funding is needed to finance numerous infrastructural projects and other investments.
“When we go to the Eurobond Market to raise bonds. If you raise let’s say 3 billion, the 3 billion is not available to undertake projects. Part of the 3 billion will be used to finance consumption. Perhaps, 70% will be available to do the real project but Islamic banking does not permit that,” he had told The High Street Journal in an earlier interview.
Prof. John Gatsi further noted that such a banking system would deepen the country’s financial market.
“We need Islamic Banking to support the conventional banking system we have in the country. It will have an added opportunity to deepen financial inclusion and infrastructure finance for both government and private sector,” he said.
Also, known as Abrahamic finance, Islamic banking is considered non-exploitative, just, and ethical compared to conventional banking.
