In the name of God, the compassionate the merciful
As Ghana engages in a crucial national economic dialogue to revive its economy, it is imperative that all viable and innovative financial systems are considered to ensure sustainable growth and inclusivity. One such system that deserves urgent attention is Islamic finance. With its ethical principles, risk-sharing mechanisms, and potential to attract foreign investment, Islamic finance could play a pivotal role in revitalizing Ghana’s economy and addressing some of its most pressing financial challenges.
The Principles of Islamic Finance: A Fit for Ghana’s Economic Goals
Islamic finance is rooted in principles that align closely with Ghana’s economic and social aspirations. It prohibits interest (riba), excessive uncertainty (gharar), and speculative behavior, while promoting risk-sharing, asset-backed financing, and ethical investments. These principles make Islamic finance a natural fit for Ghana, where economic stability, inclusivity, and sustainable development are key priorities.
By incorporating Islamic finance into the national economic dialogue, Ghana can tap into a system that emphasizes real economic activity and discourages exploitative practices. This could help address issues such as high interest rates, which often hinder small and medium-sized enterprises (SMEs) from accessing credit. Islamic finance’s profit-and-loss sharing models, such as Mudarabah and Musharakah, could provide SMEs with much-needed capital while fostering a culture of entrepreneurship and innovation.
Attracting Foreign Investment from Islamic Markets
Ghana stands to benefit significantly from the growing global Islamic finance industry, which is estimated to be worth over $3 trillion. By embracing Islamic finance, Ghana can position itself as a gateway for investment from Islamic markets, particularly in the Middle East, Southeast Asia, and North Africa. These regions are home to sovereign wealth funds, Islamic banks, and investors actively seeking Sharia-compliant investment opportunities.
For instance, Sukuk (Islamic bonds) could be issued to finance infrastructure projects, such as roads, hospitals, and schools, which are critical for Ghana’s development. Sukuk has been successfully used in countries like Nigeria and Senegal to raise funds for public projects, demonstrating its potential to complement traditional financing methods. By including Sukuk in its financial toolkit, Ghana could diversify its funding sources and reduce its reliance on conventional debt.
Promoting Financial Inclusion
One of the most compelling reasons to integrate Islamic finance into Ghana’s economic strategy is its potential to promote financial inclusion. A significant portion of Ghana’s population remains unbanked or underbanked, particularly in rural areas. Islamic finance, with its emphasis on ethical and accessible financial products, could help bridge this gap.
For example, Islamic microfinance models could provide interest-free loans to low-income individuals and small businesses, enabling them to participate in the formal economy. This would not only empower marginalized communities but also stimulate local economies and reduce poverty.
Building a Robust Regulatory Framework
To fully harness the benefits of Islamic finance, Ghana must establish a robust regulatory framework that supports its growth and integration into the broader financial system. This includes creating guidelines for Sharia-compliant products, training regulators and financial professionals, and fostering collaboration with international Islamic finance institutions.
The success of Islamic finance in other African countries, such as Kenya, South Africa, and Sudan, provides a blueprint for Ghana to follow. By learning from these experiences and adapting best practices to its unique context, Ghana can create an enabling environment for Islamic finance to thrive.
A Call to Action for the National Economic Dialogue
As Ghana’s national economic dialogue seeks solutions to revive the economy, it is crucial that Islamic finance is given due consideration. Its ethical principles, potential to attract foreign investment, and ability to promote financial inclusion make it a valuable tool for achieving sustainable economic growth.
The organizers of the dialogue must engage with Islamic finance experts, industry stakeholders, and international partners to explore how this system can be integrated into Ghana’s economic strategy. By doing so, Ghana can unlock new opportunities, diversify its financial sector, and build a more inclusive and resilient economy.
In a world increasingly focused on ethical and sustainable finance, Ghana has the chance to lead by example. Let us not miss this opportunity to embrace Islamic finance as a catalyst for economic revival and shared prosperity. The time to act is now.
YAHAYA ILIASU MUSTAPHA
The writer is the Ghana representative of the Alhuda Centre of Islamic Banking and Economics, Dubai, and Islamic Banking and Finance patron and advocate in Ghana. He is also the founder of ‘Islamic Finance TV Gh’ on Facebook, TikTok, and YouTube. He holds a BSc. in Islamic banking, economics, and finance from the International Open University. A BA. in Political Science from the University of Ghana, and a Diploma in Education from the University of Winneba. We would want to collaborate and partner with any persons or organizations who are willing to explore this field in Ghana and beyond.
Email: yahaya0246873726@gmail.com https://www.facebook.om/Yahaya.iliasu.94 0506218343 / WhatsApp 0246873726
