By Hamza Adam
The Bank of Ghana’s recent engagement with stakeholders on the potential introduction of Islamic banking in Ghana is a very commendable initiative, as it seeks to clarify widespread misconceptions about what Islamic banking truly represents.
It offers an opportunity for Ghanaians of all faiths to look beyond the name and appreciate Islamic banking as an ethical, all-inclusive financial model built on principles of fairness, shared prosperity, and economic inclusion and empowerment.
Notably, these stakeholder engagements provide a critical foundation for the effective and seamless operationalization of the non-interest banking provisions outlined in Act 930, upon the establishment of the necessary regulatory and supervisory frameworks.
What is Islamic Banking?
Islamic banking, also known as non-interest banking (NIB), is an alternative system of finance guided by principles of risk-sharing, the prohibition of interest (riba), avoidance of speculation, and investment in socially responsible ventures. While rooted in Islamic ethical values, it is not religious in practice. You do not have to be Muslim to use Islamic banking services, just as one does not have to be Catholic to receive healthcare from a Catholic hospital.
Addressing the Concerns of Skeptics
Skepticism from some members of some religious communities is not unexpected, given the strong religious identity that shapes Ghanaian society. However, it’s essential to recognize that Islamic banking, also known as non-interest banking, is not intended as a means of promoting religious dominance.
Rather, it is a values-based financial system that complements—not contradicts—many of the core principles upheld in Christianity, such as fairness, justice, responsible stewardship, and compassion for the less fortunate. Islamic banking is just a business model that focuses on ethical financial practices and economic empowerment, and not a tool of religious dominance.
Benefits to Ghana’s Economy
The introduction of Islamic banking in Ghana presents a range of potential benefits that align with the country’s broader economic development goals. Beyond offering an alternative financial model, Islamic banking can complement existing structures by promoting financial inclusion, attracting investment, and supporting ethical and sustainable financial practices.
It is estimated that up to 30–40% of adults in Ghana lack access to formal financial services. While this may be attributed to the already known factors, it is also a fact that personal, ethical, or religious objections to interest-based banking contribute to the exclusion of some individuals. Islamic banking, as a values-driven, non-interest financial alternative, can help attract this group into the financial system.
In addition to this, many individuals in Ghana, especially those whose ethical or religious beliefs oppose the payment or receipt of interest, the absence of alternative financial options has compelled them to use conventional banking services that conflict with their values, resulting in cognitive dissonance. Islamic banking will bring about the needed harmony between their beliefs and financial behavior.
Islamic finance can serve as a gateway to broader international capital flows by attracting funds from global financial markets that prioritize risk-sharing and asset-backed financing. Additionally, Islamic finance provides local banks with new avenues to diversify their portfolios, offering non-interest financial products that appeal to a wider customer base, reduce concentration risk, and strengthen the resilience of the banking sector.
Finally, Islamic banking’s asset-based and risk-sharing approach is ideal for financing agriculture and small businesses. These sectors, which conventional banks often underserve due to their perceived risk, can benefit from tailored, partnership-driven Islamic financing structures.
Market Excitement Ahead of Rollout
Some banks in Ghana are already demonstrating strong interest in the rollout of Islamic banking, viewing it as a timely opportunity to expand their product offerings and diversify revenue streams. Several institutions have begun internal preparations, including setting up dedicated non-interest banking windows and training staff in Islamic finance principles, in anticipation of its operationalization.
Conclusion
With a strong legal foundation already established under Act 930 and clear interest from industry stakeholders, Ghana is well-positioned to embrace this model. As regulatory and supervisory frameworks are finalized, Islamic banking promises to become a transformative tool, not just for financial services, but for national development. It is a business model for all Ghanaians, regardless of faith, offering new opportunities for individuals, institutions, and the economy as a whole.
