Conventional economics and finance also known as Neoliberalism has been with us for centuries.
This economic idea has dominated the world economic order up till today.
The system is driven by the ideas of famous and renowned Western economists such as Adam Smith, David Ricardo, Thomas R. Mathus, Walt W. Rostow, etc.
For about half a century now, this traditional economic system has promoted growth and yet created poverty-stricken communities by widening the gap between the poor and the rich.
This means that economic growth has so far served the pleasures of the affluent in communities.
This is partly so because in this system, it is only the rich who have the means to credit for business.
As the saying goes; “You catch fish with fish.”
This system of capitalist free-market economy or laissez-faire economic system, has also proven to be volatile by not being able to withstand the several global economic shocks.
Several recessions in the past and the recent 2007-2008 global economic crunch in particular, has bear witness to this important point.
This indicates that the neoliberal system of today cannot be relied upon, especially by developing countries as far as poverty alleviation is concerned.
John Perkins in the preface of his book “Confessions of an Economic Hitman”, writes: the idea that all economic growth benefit humankind and that the greater the growth the more widespread the benefits… is of course erroneous… It benefits only a small portion of the population… and may result in increasingly desperate circumstances for the majority.”
In a nutshell, this capitalist free-market economy has put majority of the people of the world especially in sub-Saharan Africa into economic and financial malaise.
The following are my 5 major reasons why Islamic Finance is the need of the hour:
It is divine; Quran 7: 3 states, “Follow what has been revealed to you from your Lord.”
When an instruction is from God, we the adherents of the Abrahamic faith are supposed to obey without questioning. This is because it is from the law giver. This is why I think Jews, Christians and Muslims of Ghana must rally together to sustain the campaign for the establishment of a non-interest based financial services in Ghana.
Trust: The Islamic finance and economic system has enjoyed a lot of trust globally not only from Muslim nations but also from non-Muslims nations as well. This is a result of the pure ethics and moral codes that govern its operations. The fiduciary trust that exists between the Islamic bank and its customers is very solid. The presence of trust makes people safer everywhere.
Inclusiveness: An inclusive or accessible banking system is very imperative as far as poverty alleviation is concerned everywhere in the world. Islamic finance, especially, Islamic microfinance, has proven to be accessible to all even to the poorest of the poor in communities. There have been authentic success stories from Pakistan, Indonesia, Philippine, Bangladesh, Afghanistan, etc. For example, the Akhuwat organization in Pakistan has been used to fight rural poverty and has chalked significant successes in some regions of the country.
Controls inflation: The Islamic finance system is backed by real assets which is unlike the conventional system. By this, there is a balance between the amount of money in circulation and real assets (goods) in the economy. This serves as a check to the level at which prices of goods and services go up or down. Thus, Islamic finance promotes economic stability.
Fuels employment: The several and myriads of Islamic modes of financing is very key in creating employment to the teaming idle youth in the community. Partnership contract arrangements offer a great job opportunity to even people who do not have the capital to start a business yet are skillful.
Yes, we need Islamic finance system in Ghana, not to compete or replace the already established conventional system but to fill the gaps left by this system so that we could achieve our poverty alleviation objectives (SDGs) and bring about socio-economic justice to our vulnerable in societies.
The writer, Yahaya Iliasu Mustapha is an Islamic Banking and Finance Patron and Advocate in Ghana.
Email; yahaya0246873726@gmail.com
Facebook account: facebook.om/Yahaya.iliasu.94