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Museveni gives firm nod of approval to Islamic banking

President Museveni launched Islamic banking last week

President Museveni launched Islamic banking last week

President Yoweri Museveni formally inaugurated the national operations of Salaam bank in Uganda on March 27, coinciding with his participation in Duwa prayers alongside the Muslim community at Kololo Ceremonial grounds.

The establishment of Salaam Bank Uganda, a subsidiary of a Djibouti-based institution, was facilitated by the acquisition of a license from the central bank on September 8, 2023. This milestone followed the enactment of legislation authorizing Islamic banking in Uganda, signed into law by President Museveni in August 2023.

Notably, the legislation eliminated the requirement for a “central Sharia advisory council,” a provision that had previously met resistance from the Bank of Uganda.

During the national launch event at Ko- lolo, President Museveni welcomed Salaam bank to Uganda, highlighting the country’s significant market potential with a current population of 48 million, projected to reach 106 million within the next 26 years.

“I welcome you Salaam bank to Uganda. This is a big market. The population of Uganda is 48 million now,” Museveni said.
“In the next 26 years, the population of Uganda will be 106 million; so, allow more Islamic banks to come here,” he said commending Salaam bank for leading the way.

Emphasizing the benefits of Islamic banking, which adheres to principles prohibiting interest charges on loans (Riba), President Museveni underscored its potential to bolster Uganda’s financial sector by integrating more Muslims into the formal economy.

Islamic banking principles entail a partnership model between banks and customers, wherein both parties share profits or losses based on predetermined ratios, fostering transparency and minimizing information asymmetry. Mahamoud Ali Youssouf, Djibouti’s minister of Foreign Affairs, lauded Salaam bank’s ambition to expand its operations across the continent during the delegation’s visit to Uganda.

The chairman of Salaam Bank Limited (Uganda), Ibrahim M. Abdirahman, affirmed the institution’s commitment to ethical values that prioritize humanity and environmental protection.

Abdirahman highlighted Islamic finance’s offerings, including Sharia-compliant bonds (Sukuk), which present opportunities for the Ugandan government to finance infrastructure projects without incurring interest-based debt, attracting foreign investment and fostering economic growth.

Michael Mande, managing director and CEO of Salaam Bank Ltd, emphasized the institution’s dedication to ethical business practices and enhancing the accessibility and value of its services to benefit the local community. As Salaam bank enters the Ugandan market, stakeholders can anticipate a financial institution committed to ethical standards and community development.

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