The Dean of the University of Cape Coast Business School, Prof. John Gatsi has said the World Bank and IMF have given recognition and acceptance to ethical finance in many countries including USA, UK, France, Germany, Nigeria and Uganda among others.
He noted that the issue of ethical finance should be looked at from financial inclusion perspective and not religious point of view though is structured based on Islamic law.
Speaking at a seminar organised by Islamic Finance Research Institute Ghana at the University of Cape Coast for Students on the topic "Regulatory Reforms for Ethical Finance," Prof. Gatsi indicated that the slow pace of amending the law to accommodate Islamic finance and banking denies the country the immense benefits of inclusion and opportunity for choice of financial products.
According to him, Act 930 is largely enacted for conventional banks and there is a need to create legal flexibility to accommodate governance structures conducive to Islamic banking.
He said among other things that there are infrastructure support benefits to be derived by the country. He added that Nigeria over the past few years has leveraged Islamic bonds to construct roads and federal projects.
Prof. Gatsi stressed that section 18(1)(r) seems to grant non-interest banking services but the restrictions and prohibited transactions in section 19 relating to direct participation in agriculture, housing and industrial development will not be in consonance with partnerships, joint ventures and project finance arrangements in Islamic finance.
He further explained that access to Islamic financial products, services and instruments has no regard on whether an applicant is a Muslim or not. "There is no fear about the promotion of Islamic religion because it will not arise. Rather entrepreneurs and businesses will have alternatives to finance their businesses in a socially acceptable and sustainable manner."
Prof Gatsi indicated that regulatory reforms are only needed in licensing Islamic banks and individuals can enter into various joint ventures and partnerships to foster interest-free loans and transactions among themselves. He stressed that regulations and the law come in when "we are talking about Islamic banks for every financial institution must be licensed and regulated."
He intimated that the corporate governance design of the conventional banks in section 56 of Act 930 falls short of the two-tier corporate governance structures of Islamic banks needed to vet Islamic financial products and instruments.
He calls for broad-based engagement to include leaders of commercial banks, Muslim clerics, Christian leaders, academics and parliament for a better appreciation of the principles.