Non-Interest Banking and Finance in Ghana: Pointers to clear the misconception clog

The Bank of Ghana is developing a comprehensive framework for the introduction of Non-Interest Banking and Finance (NIBF) in the country.

Led by Professor John Gatsi, Advisor to the Bank of Ghana, the central bank aims to have this framework ready by the end of 2025 as it is currently on a broader jurisdictional and stakeholder engagement.

The NIBF, amid its comprehensive and holistic financing system which focuses on more productive results from money as against the conventional financial system which focuses on earning on money, provides secured, guaranteed and highly risk averse sources of funding tailored for specific projects at a time.

“NIBF is expected to finance big infrastructure projects, improve socio-economic activities, increase economic growth, deepen financial inclusion, and promote risk sharing in financial transactions,” Prof Gatsi has noted.

What You Should Know:

Non-Interest Banking &Finance (NIBF) 101

1. It is not for any particular religion and doesn't promote a religion.

2. Shareholders, clients and customers come from all backgrounds irrespective of religion

3. It will be under Bank of Ghana's regulatory authority.

4. It has no relationship to membership of any religious entity within and outside Ghana though the principles are universal religious values.

5. The UK has 25 NIBF institutions at the end of 2024 with 35% of customers are Non- Muslims. 40% of clients in Australia are non-muslims. In Nigeria, there is a growing number of the public from all religions.

6. There is therefore no discrimination as to shareholders, customers and clients. Christians, Muslims, Traditionalists etc work in NIBF institutions globally including Nigeria.

7. NIBF has a business case , infrastructure finance and financial inclusion benefits for Ghana.

8. It doesn't help for inclusive nation building to preach religious domination as part of NIBF

9. The Bank of Ghana is not a religious body and only promotes financial products that will contribute meaningful to the economy and expand the frontiers of financial inclusion and regulatory efficiency.

Non-Interest Banking &Finance (NIBF) 101a

1. NIBF can be implemented by conventional banks including Microfinance institutions , insurance firms and capital markets firms called non-interest banking window.

2. 2025 NIBF Survey by IFRIG shows the following for Ghana:

a. 90% of respondents of about 5778 know about NIBF largely within the last one year mainly through social media and online news portal

b. 96% believe NIBF has a future in Ghana

c. 98% are willing to patronize NIBF when rollout

d.75.9% say it will improve financial inclusion and 81.5% say it will help MSMEs

Non-Interest Bank and Finance (NIBF) 101b

1. In secular economies globally, many customers utilize services from both conventional and NIBF institutions.

2. Central Banks globally supervise NIBF institutions via Banking Supervision Departments.

3. Consistency with principles is assured through a Product Experts Committee.

4. Non-interest Banks lead in NIBF, followed by Sukuk or non-interest bonds.

5. Strong links exist between NIBF and real sector development.

6. NIBF principles align with productivity.

Non-Interest Banking and Finance (NIBF) 101c

1. In various countries, the performance of NIBF institutions and conventional financial institutions converges, while in others, NIBF institutions slightly outperform conventional ones.

2. Non-Interest Insurance appeals to underserved communities.

3. NIBF is typically led by the private sector, with private citizens providing capital to establish NIBF institutions.

4. NIBF can be listed on stock exchanges, as exemplified by the UK, and in West Africa, Jaiz Bank, a NIB is listed on the Nigerian Stock Exchange.

5. NIBF institutions publish annual reports and conduct annual general meetings, as required of all conventional banks, insurance, and capital markets firms.

6. The board and top management of NIBF institutions are subject to the fit and proper test of Central banks, Security and Exchange Commissions and National Insurance Commissions as a key governance requirement applied to conventional counterparts.

7. Regulatory capital requirements are applied to NIBF institutions

8. Capacity building is expected.