In the name of Allah, the compassionate the merciful
The United Nations’ Sustainable Development Goals (SDGs) represent a universal call to action to end poverty, protect the planet, and ensure prosperity for all by 2030. For Ghana, a country with a vibrant economy and a youthful population, achieving these goals is both a priority and a challenge. While traditional financial systems have played a significant role in driving development, Islamic finance offers a unique, ethical, and inclusive alternative that can accelerate Ghana’s progress toward the SDGs. By leveraging the principles of Islamic finance, Ghana can address key challenges such as poverty, inequality, and environmental sustainability while fostering inclusive economic growth.
What is Islamic Finance?
Islamic finance is a financial system that operates in accordance with Islamic principles, which emphasize ethical, equitable, and socially responsible practices. Key features include the prohibition of interest (riba), excessive uncertainty (gharar), and speculative behavior (maysir). Instead, Islamic finance promotes risk-sharing, asset-backed transactions, and investments in socially beneficial projects. These principles align closely with the values of sustainability, inclusivity, and ethical governance that underpin the SDGs.
Islamic Finance and Poverty Alleviation (SDG 1)
One of the core objectives of Islamic finance is to reduce poverty and promote economic justice. Instruments such as zakat (obligatory almsgiving) and sadaqah (voluntary charity) are powerful tools for wealth redistribution. In Ghana, where poverty remains a significant challenge, Islamic finance can complement existing efforts by channeling funds toward microfinance initiatives, small and medium-sized enterprises (SMEs), and social welfare programs. For example, Islamic microfinance institutions can provide interest-free loans to low-income individuals, enabling them to start businesses and improve their livelihoods. This aligns with SDG 1 (No Poverty) by creating opportunities for economic empowerment and reducing income inequality.
Promoting Inclusive Economic Growth (SDG 8)
Islamic finance emphasizes inclusivity and equitable access to financial services. In Ghana, where a significant portion of the population remains unbanked or underbanked i.e. for example, out of 35 million Ghanaians, only 4 million have bank accounts which is a huge financial deficit, Islamic finance can bridge this gap by offering Sharia-compliant financial products. For instance, Islamic banks and financial institutions can provide savings accounts, investment opportunities, and insurance products that cater to the needs of underserved communities, including Muslims and non-Muslims alike. By fostering financial inclusion, Islamic finance can contribute to SDG 8 (Decent Work and Economic Growth) by creating jobs, supporting entrepreneurship, and driving sustainable economic development.
Supporting Sustainable Infrastructure and Innovation (SDG 9)
Islamic finance is well-suited to fund infrastructure projects that are essential for Ghana’s development. Through instruments such as sukuk (Islamic bonds), Ghana can raise capital for projects in transportation, energy, and healthcare while adhering to ethical investment principles. For example, sukuk can be used to finance renewable energy projects, such as solar and wind farms, which align with SDG 7 (Affordable and Clean Energy) and SDG 9 (Industry, Innovation, and Infrastructure). By prioritizing environmentally sustainable projects, Islamic finance can help Ghana transition to a green economy and mitigate the effects of climate change.
Addressing Inequality (SDG 10)
Islamic finance’s emphasis on fairness and social justice makes it a powerful tool for reducing inequality. In Ghana, where disparities in wealth and access to resources persist, Islamic finance can promote equitable wealth distribution through profit-sharing arrangements and community-based investments. For instance, Islamic banks can partner with local cooperatives to fund agricultural projects that benefit smallholder farmers, thereby reducing rural poverty and addressing SDG 10 (Reduced Inequalities). Additionally, the ethical nature of Islamic finance ensures that investments are directed toward projects that benefit society as a whole, rather than prioritizing profit maximization at the expense of social welfare.
Environmental Sustainability (SDG 13)
Islamic finance’s prohibition of investments in harmful industries, such as those involved in alcohol, gambling, and environmental degradation, aligns with the principles of environmental sustainability. In Ghana, where deforestation, pollution, and climate change pose significant threats, Islamic finance can support initiatives that promote conservation and sustainable resource management. For example, green sukuk can be issued to fund reforestation projects or the development of eco-friendly infrastructure. By integrating environmental considerations into financial decision-making, Islamic finance can contribute to SDG 13 (Climate Action) and help Ghana build a more resilient and sustainable future.
Strengthening Partnerships for the Goals (SDG 17)
Achieving the SDGs requires collaboration between governments, private sector actors, and civil society. Islamic finance institutions can play a pivotal role in fostering partnerships by working with international organizations, development agencies, and local communities. For instance, Ghana can collaborate with Islamic development banks, such as the Islamic Development Bank (IsDB), to access funding and technical expertise for SDG-related projects. By leveraging these partnerships, Ghana can accelerate its progress toward the SDGs while promoting global solidarity and cooperation.
In a nutshell, Islamic finance offers a holistic and ethical approach to development that aligns closely with the principles of the UN’s Sustainable Development Goals. By integrating Islamic finance into its development strategy, Ghana can address critical challenges such as poverty, inequality, and environmental degradation while fostering inclusive and sustainable economic growth. As the global community strives to achieve the SDGs by 2030, Islamic finance represents a powerful tool that can help Ghana and other nations build a more just, equitable, and prosperous future for all. By embracing this innovative financial system, Ghana can take a significant step toward realizing its development aspirations and contributing to a better world. And Allah knows best!
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.
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