Bright Simons Warns BoG Framework May Cause Regulatory Confusion

Bright Simons, Vice President of IMANI Africa, has raised serious concerns about the Bank of Ghana’s draft guidelines for regulating “Non-Interest Banking,” warning of potential legal and operational challenges.

Mr. Simons, in an article published on Saturday, December 13, argued that the attempt to rebrand Islamic Banking as Non-Interest Banking may be counterproductive, failing to acknowledge its foundation in Islamic financial principles.

He pointed out a key inconsistency: while the draft guidelines prohibit religious symbols and terminology, banks are still expected to adhere to standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). “This creates confusion for financial institutions, customers, regulators, and the judiciary,” he stated, “especially given the absence of a specific Islamic Banking law within Ghana’s legal system.”

According to Mr. Simons, disputes over Islamic finance instruments like profit-sharing and partnership contracts could prove difficult for Ghanaian courts to resolve, as these are rooted in Islamic jurisprudence, which differs from the country’s existing statutory and common law.

The proposed “window” system, allowing conventional banks to offer non-interest products alongside traditional services, also drew criticism. He cautioned that this could be exploited, enabling banks to access incentives without fully embracing the risk-sharing principles central to non-interest banking.

Further concerns were raised regarding taxation, deposit insurance, liquidity management, and capital adequacy. Mr. Simons argued the guidelines lack clarity on how non-interest banks will compete fairly within Ghana’s current financial and tax structures.

He also questioned the prohibition of late-payment penalties for non-interest banks, warning that it could weaken repayment discipline and increase financial risk. “This could undermine the very foundations of responsible lending,” he explained.

In conclusion, Mr. Simons fears the framework could create a non-interest banking system that looks good on paper but is unsustainable in practice. He urged the Bank of Ghana to be transparent and introduce clear legislation covering taxation, bonds, liquidity support, and dispute resolution for Islamic Banking.

Without these reforms, he cautioned, Ghana’s non-interest banking sector may struggle to attract the necessary investment and customer base.

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