- Ghana Must Demystify Non-Interest Banking to Unlock Wider Market — Finance Professor
Ghana must overcome misconceptions surrounding non-interest banking if the country is to unlock its potential as a mainstream source of finance for businesses, ethical investors, governments and customers across religious lines, according to Rev. Prof. Joseph Mbawuni, Professor of Finance and Accounting.
Speaking at the iFRIG National Dialogue on the theme, “Does Non-Interest Banking Belong Only to a Particular Group? Understanding Non-Interest Banking as a Financial Opportunity for All,” Prof. Mbawuni argued that the financing model should not be treated as a system reserved for Muslims, but evaluated according to its commercial and developmental characteristics.
His intervention places public understanding at the centre of Ghana’s emerging non-interest finance debate. While the model has roots in Islamic and wider Abrahamic commercial principles, Prof. Mbawuni said its features — including risk sharing, asset backing, ethical investment and avoidance of exploitative transactions — can appeal to customers regardless of their religious affiliation.
“We also have to demystify that and realize that, no. Let’s separate non-interest banking from the religion,” he said.
Prof. Mbawuni said his own interest in the subject developed unexpectedly. As a young Christian interested in finance, he travelled to Pakistan, encountered Islamic banking and subsequently returned to Ghana to research the system more deeply.
“And when I came back, I said no. I did research more. We can learn more from this Islamic banking,” he said.
That research, he said, revealed a significant gap between perceptions surrounding the model and the practical financial benefits that potential customers identify in it.
He cited the example of a prospective customer who contacted him after seeing publicity surrounding the national dialogue.
“She is the daughter of a Presbyterian pastor,” Prof. Mbawuni said, explaining that her interest arose not from Islamic affiliation but from the prospect of accessing non-interest financial products.
The example, he argued, demonstrates that Ghana’s potential market is significantly broader than its Muslim population and that religious labelling could unnecessarily limit participation.
One of the most important potential constituencies is the growing population of consumers and investors who assess financial products according to ethical, environmental and social considerations.
Prof. Mbawuni linked non-interest finance to the wider environmental, social and governance investment movement, under which investors increasingly scrutinise not only financial returns but also the activities their money finances.
“These are customers that are particular about environment, social and governance, the ESG,” he said.
For Ghana, that principle has immediate implications for the long-running fight against illegal mining.
“If galamsey funding or financing could be stopped, galamsey will also stop,” Prof. Mbawuni said. “Non-interest banking will not finance galamsey because it destroys our environment.”
The argument adds another dimension to the debate over financial-sector responsibility. Ghana’s environmental challenge is not merely about enforcing mining laws after damage occurs, but also about examining where environmentally destructive enterprises obtain the capital needed to operate.
Non-interest finance could therefore become part of a broader conversation around responsible capital allocation, particularly where financial institutions incorporate ethical restrictions into decisions about which activities they are prepared to fund.
SMEs represent another potentially important market.
Prof. Mbawuni highlighted Musharakah, a partnership-based financing structure, and Murabaha, an asset-backed arrangement, as examples of instruments capable of changing the traditional relationship between lender and borrower.
Research from Malaysia, Nigeria, the United Kingdom and the Middle East, he said, indicates that smaller businesses can find such models attractive because financiers may assume a more participatory role in the underlying enterprise.
“They see the lender as a partner, and then they share the benefits and the losses together,” he said.
That distinction could be commercially significant in Ghana, where access to affordable long-term capital remains a persistent challenge for smaller enterprises.
Instead of structuring every financing relationship around a conventional loan and fixed interest obligation, partnership and asset-backed arrangements could potentially align the interests of entrepreneurs and financiers more closely with the economic performance of the business.
At the larger end of the market, Prof. Mbawuni identified Sukuk as another opportunity.
Sukuk instruments can provide governments and corporations with an additional mechanism for mobilising funds from investors while linking financing to identifiable assets or economic activities.
“If we can go in for sukuk, life becomes easy for all of us,” he said.
The proposition is not that Sukuk should replace conventional sovereign borrowing. Rather, its value for Ghana could lie in widening the investor base and increasing the range of instruments through which development projects and corporate investment are financed.
That diversification could prove particularly relevant as Ghana searches for additional sources of capital while seeking to manage pressure on public finances.
Prof. Mbawuni also pointed to the United Kingdom as evidence that a market for non-interest finance does not depend on having a predominantly Muslim population.
He said Islamic banking initially encountered barriers in the UK but gained greater acceptance as the market developed from around 2004.
“From the year 2004, when the doors started opening, it has been a different story by now,” he said.
For Ghana, the larger lesson is that the economic functions of non-interest finance should matter more than its religious origins.
“We should embrace it. And at the end of the day, it is not the issue of faith. It is the issue of development. It is the issue of progress for all of us, Muslim and non-Muslim,” Prof. Mbawuni said.
Properly regulated and understood, non-interest finance could therefore contribute to financial inclusion, provide alternative funding structures for SMEs, attract ethically conscious investment and deepen Ghana’s capital market.
But Prof. Mbawuni warned that misunderstanding may remain the biggest barrier.
His research found that misconceptions among non-Muslims were driven substantially by “lack of knowledge, lack of information”, reinforcing the need for sustained education about how the products work and who can use them.
Ghana’s challenge is consequently not simply to introduce another banking model. It is to build sufficient public confidence for customers and investors to judge non-interest finance according to risk, returns, ethics and economic usefulness rather than religious identity.
As Prof. Mbawuni put it, the ultimate question is one of development and “progress for all of us, Muslim and non-Muslim”.
For Ghana, successfully demystifying the model could determine whether non-interest finance remains a narrowly understood financial niche or develops into a broader channel for mobilising capital, supporting businesses and directing investment towards more sustainable economic activity.
