Communiqu? Issued On Islamic Banking

A communiqu? issued at the end of a 2-Day Specialized Training Workshop on Islamic Banking, Islamic SME, and Islamic Micro-Finance for participants from various financial institutions in both Ghana and neighboring countries organized by Global Institute of Islamic Banking, Insurance & Consultancy (GIIBIC), with support from one of its International Strategic Partner ALHUDA Center for Islamic Banking and Economics of Pakistan at Ghana College of Physicians and Surgeons, near Ridge Round about Accra from Friday 13^th to Saturday 14^th June , 2014

PERMEABLE:

Islamic banking, and finance, is an ethical banking practice which promotes sound industrial development and financial inclusion via interest-free banking. It is made operational through profit ?and- loss sharing mechanism, fixed service charges, or through the use of special purpose vehicle (SPV) who acts as an agent for a financier or a client.

Today Islamic banking and finance has widely been adopted in more than 75 countries globally and continues to get wider attention, because it has been proved to be steering the development of financial services in line with the right ethics which inspires life. Islamic finance has also been proved to support social good through finance and it is the tool for financial inclusion.

The ability for Islamic banking and finance to influence finance to be a catalyst for social good, as well as green and ethical movements have contributed to the excitement and promotion of Islamic banking and finance in many countries including hardcore secular and developed nations such as the UK, the USA, France, Germany, Australia, South Africa, ?Singapore etc.

Robust performance of Islamic banking and finance sector during the 2007-2009 financial crises has added to its attractiveness as a viable financial tool. The?industry?consists of numerous financial institutions managing more than $2 trillion asset value,?which is expected to cross 6.5 trillion by 2020. It is one of the fastest growing financial sub-sectors?which has been evolving and expanding both financially and geographically due to its provision of ethical financial solution to?mankind.

Stakeholders in the country financial industry including the central bank and policy makers have shown keen interest in promoting Islamic banking, and finance in Ghana.? The aim is to help the country developmental goals, particularly to increase diversification of state and corporate funding sources to include funding from ethical financiers and investors. Islamic finance funding is based on equitable distribution of risk and returns between suppliers and users of funds. In addition, an Islamic banking in Ghana will help include sizable percentage of people looking for moral and ethical, interest-free banking and financial products into banking and finance stream thereby surging the country?s GDP in the years to come.

However there is yet way to explore in getting a full fledge Islamic banking, an Islamic Banking window, or an Islamic financial product promoted and regulated by the government.

In view of this GIIBIC?is established to play?a leading?role in the developmental process of the industry in Ghana.? GIIBIC provides Islamic finance education, training, and consultant services (developing and certifying products, setting up Islamic bank or insurance company, sourcing of fund, Islamic Investment advice, product-compliance rulings and other related issues) in Ghana with global reach.

It is in line with these that GIIBIC in collaboration with ALHUDA Centre for Islamic Banking, and Economics organized a 2-day workshop on Islamic Banking, Islamic SME, and Islamic Micro Finance in Accra. Participants came from various financial institutions in the country, neighboring country, and Bank of Ghana.

At the opening ceremony, the Director General of GIIBIC, Abdul-Muumin Saeed welcomed participants to the interactive workshop. He highlighted that, the main objective of organizing the training is to build the human resource requirement needed for a successful industry development. According to him, GIIBIC has also built a strategic partnership with International

industry experts in UK, Bahrain, UAE, South Africa, Nigeria, Malaysia, and Pakistan to help transfer of expertise, and experience.

The following topics were covered by presenters during the workshop:

1. Overview of Islamic Banking and Finance Industry
2. Islamic Commercial Law Rulings
3. Sources of Islamic Finance
4. Differences between Islamic and conventional banking
5. Islamic financial products
6. Global overview of Islamic finance industry
7. Products and services of Islamic financial Institutions world widely
8. Sources of Islamic Micro Finance
9. Principles of Islamic Micro Finance
10. A glance on Islamic Micro Finance
11. Role of Islamic? Micro Finance in (Africa) Poverty Alleviation

OBSERVATIONS:

At the end of the presentations and deliberations, participants observed that:

1. Islamic banking and finance is a tool for financial inclusion, in addition to its primary role as a viable economical instrument in comparison to interest-based, or debt-based conventional financial system.
2. Participants agreed that Islamic finance create financial equilibrium by helping debt-ridden and other excluded groups to participate in the financial stream.
3. They also agreed that, many sectors in Ghana lack funding, while government borrowing is costly to the country, hence government could use Islamic bond termed as sukuk to fund sectors that are under fund.? Countries like UK, Nigeria, Malaysia, and Singapore have used the same to develop many sectors.
4. Ghana could attract surplus funds from the Middle East rich oil countries, if funds are to be administered according Islamic finance business principles.
5. ?Banks and financial institutions in the countries need to explore the potential of Islamic banking market, by launching pilot project (Islamic banking products) to test the market.
6. ?Difficulties may arise when establishing an Islamic banking products in Ghana using banking rules originally made to regulate and supervise conventional banks. That is exchange control, corporate and personal tax barriers will be hindrance to Islamic finance.
7. Another issue will be Central Bank capital adequacy ratio requirement, or banks dealing in direct entrepreneurship using depositor?s fund, which is a core business of an Islamic bank.
8. Islamic Micro Finance is a tool for social development

RECOMENDATIONS

After a careful consideration of the above observations, the following recommendations were made:

1. In order to effectively promote Islamic banking and finance in Ghana; there is the need to further develop human capacity and learning of Islamic Financial system.
2. The public and financial institutions also require professional development programs and related developmental activities geared towards capacity development.
3. The central bank should take a concrete steps to draw a comprehensive Islamic banking and finance regulatory framework to include Islamic banking Act, Takaful Act, relevant supplementary guidelines to support both? Acts with recommended appropriate accounting treatment for Islamic financial industry.
4. The government should bolster the industry by reviewing the existing law surrounding banking liquidity requirement, possibly reserve requirement in line with Islamic financial requirements.
5. Banks could pilot Islamic windows, using existing law, provided products can be tailored by employing a special purpose vehicles, as agents for clients, or financier
6. Islamic Micro finance should be considered by investors to help eradicate poverty. The eradication of poverty and achievement of an equitable distribution of income and wealth is part of an overall scheme for the establishment of a socio-economic order. Islamic Microfinance attached great importance to the dignity of each individual human being.

CONCLUSION – In conclusion it was agreed by participants at the workshop that, if the above recommendations are properly implemented by the parties (all stakeholders of financial sector), Ghana will be a fertile environment for the growth of Islamic finance which will attract investors looking for Islamic financial products, include persons left out of the banking and finance sector due to interest-based products, and finally help develop the country?s social, economical, and infrastructural facilities.

Abdul-Muumin Saeed

Director General (GIIBIC)

Tele: 0542014094

Email: [email protected], [email protected]