Islamic Finance to Complement, Not Compete With Conventional Banking – Prof Gatsi
Policy Advisor on Islamic Banking at the Bank of Ghana, Professor John Gatsi, has underscored that non-interest banking, also known as Islamic finance, is designed to complement Ghana’s conventional banking system rather than displace it.
According to him, the model offers a unique structure that broadens financial inclusion, supports infrastructure development, and fosters economic diversification, particularly in trade and commerce.
“Non-interest banking and finance is poised to enhance our market economic structure. It will not outperform conventional structures because it is not a competitor,” Prof Gatsi explained. “Rather, it plays crucial complementary roles in municipal, central government, and private sectors’ infrastructure and enterprise funding.”
Prof Gatsi made the remarks amid growing public discourse around the formal introduction of Islamic banking in Ghana and its possible implications for the existing financial system.
He cited examples of jurisdictions that have long integrated Islamic finance into their economies including the UK, Saudi Arabia, Dubai, Turkey, Japan, Canada, France, Netherlands, Nigeria, Uganda, Hong Kong, Singapore, Luxembourg, the US, and Malaysia, where Islamic financial institutions co-exist without undermining conventional banks.
“These institutions have not even competed with conventional banks, let alone dismantled them,” he stated, dismissing fears that Islamic finance could destabilise Ghana’s banking sector. “The apprehension that Islamic finance and banking will negatively affect conventional banks in the country is not rooted in progressive information widely available to regulators globally.”
He further pointed out that the introduction of Islamic banking would help Ghana achieve economies of scope and deepen financial access for underserved populations.
“Non-interest banking will achieve financial inclusion, diversification in financing trade and commerce, as well as project finance for government and the private sectors of the economy,” he noted.
Prof Gatsi also highlighted the important socio-economic role of Islamic finance, particularly in advancing the UN Sustainable Development Goals (SDGs).
“Furthermore, non-interest banking and finance will provide unique support to women entrepreneurs and contribute to achieving the SDGs,” he added.
The Bank of Ghana is currently looking at developing regulatory frameworks to guide the licensing and operation of Islamic banking institutions in the country.
