Once the necessary regulations to operationalise NIBF are developed, the move will also allow existing financial institutions to secure licences to provide non-interest financial products.

Although the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) already permits non-interest banking activities, implementation has stalled for years due to the absence of regulatory guidelines.

To address the gap, the central bank has begun engaging financial sector stakeholders to build their capacity and prepare them for the rollout of NIBF operations.

The Advisor on Non-Interest Banking and Finance at BoG, Professor John Gatsi, at a stakeholder engagement on Non-Interest Banking and Finance in Accra yesterday, stated that the bank was learning from countries such as Nigeria, Kenya, Togo and Benin, and was committed to providing clear regulatory direction to support both standalone NIBF banks and licensed NIBF windows within existing institutions.

Regulatory clarity

Prof. Gatsi explained that the BoG’s renewed effort was aimed at ensuring regulatory clarity for an activity that had long existed in law, but lacked the guidelines needed for implementation.

“Act 930 already makes room for non-interest banking as a permissible activity, but without regulations, nobody could operationalise it,” he said.

The Professor of Finance and Dean of the University of Cape Coast School of Business said that the BoG was now focused on issuing the directives required to make the framework functional and accessible to both new and existing financial institutions.

As part of the process, Prof. Gatsi said, the central bank was engaging stakeholders and strengthening industry capacity to ensure that institutions were well prepared before licences were issued.

“What we are doing today is capacity-building because if you don’t have people who are knowledgeable in the non-interest banking space, then you cannot give them a licence,” he said.

Prof. Gatsi explained that some banks had already begun training staff locally and abroad to align with global best practices in non-interest finance, and the BoG expected more institutions — including financial technology companies (Fintechs), microfinance companies, rural banks, savings and loans firms, and capital market players — to follow suit.

Regional experience

Prof. Gatsi stated that Ghana was drawing lessons from neighbouring countries where non-interest finance was already established and functioning efficiently.

“Nigeria, Kenya, Togo and Benin are all practising versions of this model, and we are learning from their experiences,” he said.

He stressed that Ghana and Liberia were currently the only West African countries yet to fully operationalise non-interest banking, although Liberia was also preparing to do so.

Prof. Gatsi said the model was not meant to replace traditional banking, but to complement it.

“It is not coming to overshadow the conventional banking system. It is an alternative model based on risk-sharing and profit-sharing, and it has the potential to revolutionise how the financial sector supports the real economy,” he added.

Collaboration

The Head of Banking Supervision Department of BoG, Ismail Adam, stated that the central bank’s progress on non-interest banking had been made possible through a very inclusive engagement process, involving both Christians and Muslims, ensuring that the model reflected the country’s secular values and shared national principles.

He explained that the collaborative approach had strengthened regulatory coordination with the Securities and Exchange Commission (SEC) and the National Insurance Commission.

“Both Christians and Muslims have agreed to call this novel concept non-interest banking and finance to reflect the secularity and common principles that we share as a nation.

“Regulators and market players must develop the expertise and systems needed to operate effectively in this emerging ecosystem,” Mr Adam said in a speech read on behalf of the Governor.

He urged financial institutions to scale up staff training and technical preparedness, as an inclusive stakeholder process “positions Ghana to adopt non-interest banking in a manner that promotes financial stability and broad participation.”

SEC’s readiness

The acting Director-General of Securities and Exchange Commission (SEC), Dr James Kludze Avedzi, stated that the commission was fully prepared to support the rollout of non-interest finance instruments, saying that the SEC has been involved “from day one” in the joint learning and training process with the Bank of Ghana.

He explained that countries such as Nigeria, Kenya and Tanzania had successfully issued non-interest finance bonds, as the SEC was drafting guidelines to regulate similar instruments in the country.

“We are ready as a commission, and we are equipping our staff to ensure we can effectively guide and supervise the issuance of Sukuk and other non-interest products,” Dr Avedzi said.