The Dean of the School of Business at the University of Cape Coast, Professor John Gatsi, has said the time is right to open the option to alternate sources of funding through ethical finance, especially Islamic finance.
Prof. Gatsi says Islamic finance – forecasted to have a total global asset value of US$4.94trillion by 2025 could be the ideal vehicle for lending to businesses and households at much lower rates than the current average of 36 percent.
Also known as Islamic banking, it is pivoted on banks and their clients making profits and losses together, with Prof. Gatsi believing that such a system could drive infrastructure-focused public-private partnerships as its underlying principles support socially inclusive and development-promoting activities.
Prof. Gatsi says Islamic finance provides practically all the products that traditional banking offers, but places a higher emphasis on partnerships and joint ventures while striving to promote financial inclusion.
The economist reiterated recent calls for reforms to the Banks and Specialised Deposit-taking Institutions Act, 2016 (Act 930) to include ethical banking and achieve financial inclusion in the country.
Prof. Gatsi argued that failure to amend the law for Islamic finance will see the nation lose out on the benefits it brings. as well as the increased choices for financial products.
He added that the growth of Islamic finance in non-Muslim countries shows that the benefits transcend the issue of ethical finance; and hence should be viewed from a financial inclusion perspective, not from a religious viewpoint.
The Islamic Finance Development Report 2021 projected growth in size of the Islamic finance industry from US$3.374trillion across 135 countries in 2020 to US$4.94trillion by 2025, at an average growth rate of 8 percent.
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