In the name of Allah, the compassionate the merciful
Islamic finance has the potential to bring several benefits to Ghana if it is established and implemented effectively. Neighboring countries in West Africa such as Cote d’Ivoire, Nigeria, Togo, and Guinea, have either established an Islamic finance house or issued Islamic bonds (sukuk).
Many Ghanaian institutions and bodies, persons both Muslim and non-Muslim have been calling for the establishment of Shariah-compliant financial services to augment the already consolidated conventional system in the country.
For about a decade or so now, the fire of advocacy has been burning. Alhamdulillah (praise be to Allah) mypublisher24 has actively joined the wagon. May Allah continue to reward this media house and its patrons for these selfless sacrifices. May Allah make it an ongoing charity for you. Ameen.
The following positive changes are expected to happen to the Ghanaian economy, especially to the customers of Islamic banks and Takaful institutions.
Financial Inclusion: Islamic finance must enhance access to financial services in Ghana, particularly for segments of the population that have been underserved or excluded by conventional banking. Islamic banks often offer more inclusive and accessible financial products, such as profit-sharing and partnership-based arrangements, which can cater to a broader range of customers.
Enhances Ethical and Social Responsibility: Islamic finance is grounded in ethical principles, so it must discourage investments in activities that are considered unethical or harmful according to Islamic values. This can encourage responsible and ethical investment practices in Ghana, promoting sustainable and socially responsible development.
Infrastructure Development: Islamic finance has been used to fund various infrastructure projects globally, including roads, bridges, and energy facilities. Establishing Islamic finance in Ghana must provide an additional source of funding for infrastructure development, which is essential for economic growth.
SME Financing: Islamic finance often emphasizes partnership and profit-and-loss sharing arrangements, which can be particularly beneficial for small and medium-sized enterprises (SMEs) in Ghana. SMEs are a significant driver of economic activity, and Islamic finance must provide them with access to alternative financing options.
Risk-Sharing: Islamic finance is based on risk-sharing principles, which can encourage more responsible lending and borrowing practices. By sharing the risks and rewards of financial transactions, it can help reduce excessive debt burdens and financial instability.
Foreign Investment: Establishing Islamic finance in Ghana must attract foreign investment from Islamic financial institutions and investors as happening elsewhere. This must in turn help diversify sources of capital and stimulate economic growth.
Islamic Capital Market: Islamic finance must lead to the development of Islamic capital markets in Ghana, including the issuance of Islamic bonds (Sukuk). These capital market instruments must provide an alternative source of financing for both the government and private sector.
Financial Stability: Islamic finance principles, which discourage excessive speculation and the charging of interest, must contribute to financial stability by reducing the likelihood of financial crises.
Cross-Border Trade: Islamic finance must facilitate cross-border trade with countries that have established Islamic finance systems, creating new opportunities for international trade and investment. This is especially imperative for Ghana and its neighbours.
Cultural and Religious Sensitivity: For a predominantly Muslim population in the northern regions of Ghana, Islamic finance must provide financial services that are in line with their cultural and religious values, fostering a sense of financial inclusion and empowerment.
To realize these potential benefits, Ghana would need to establish a regulatory framework and institutions that govern Islamic finance, educate the public about its principles and offerings, and ensure compliance with Sharia law. Additionally, effective supervision and risk management mechanisms would be crucial to mitigate potential risks associated with Islamic finance products.
As all stakeholders are working round the clock to realize this dream very soon, we pray that all these goodies aforementioned will go a long way to uplift the needy and vulnerable in Ghana and beyond. And Allah knows best!
YAHAYA ILIASU MUSTAPHA
The writer is an Islamic Banking and Finance patron and advocate in Ghana.
Email: yahaya0246873726@gmail.com
Facebook account: facebook.om/Yahaya.iliasu.94
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