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Why Islamic Banking Which Prohibits The Charging Of Interest Will Succeed In Uganda

BoU Deputy Governor, Michael Atingi-Ego (Left) and Permanent Secretary/Secretary to the Treasury, Ministry of Finance, Planning and Economic Development, Ramathan Ggoobi at the launch of Islamic banking in Uganda

The Bank of Uganda (BoU) Deputy Governor, Michael Atingi-Ego is confident that Islamic banking will succeed in Uganda.

Speaking at the launch of Islamic Banking in Uganda at BoU Board Room on September 08, 2023, where the Central Bank granted an Islamic banking license to Salaam Bank Limited, Atingi-Ego thanked the Government and all stakeholders for working tirelessly to put in place the enabling Islamic banking legal framework.

“This is a significant milestone for Uganda, and it is a testament to the commitment of all involved to promoting financial inclusion and economic development. I would also like to congratulate the Board of Directors, management, and staff of Salaam Bank Limited on their efforts to pioneer the Islamic banking model in Uganda,” he said.

“This is a bold and innovative move, and I expect it will succeed. Islamic banking is based on the principles of Shariah, which prohibits the charging of interest, products with uncertainty (speculation), gambling, and activities that society deems detrimental. This makes it a more ethical and sustainable form of banking, and it is well-suited to the needs of many Ugandans,” he added.

Atingi-Ego said he was particularly pleased that Islamic banking is not limited to Muslims.

“This financial offering can benefit everyone, regardless of their religious beliefs. Of course, there are risks associated with any new venture. However, I am confident that Salaam Bank Limited has the expertise and resources to manage these risks,” Atingi-Ego said, adding that the BoU is committed to providing oversight and support to Salaam Bank Limited as it embarks on this new journey.

He added that BoU believes that Islamic banking has the potential to make a significant contribution to the development of Uganda’s financial sector in several ways, such as financial inclusion: making it easier for people to access financial services, regardless of their income or financial situation; product diversity: offering a wider range of financial products and services than traditional banking; profit-sharing: not charging interest; instead, sharing profits with their customers, which can be more beneficial for both parties in the long run; real-world investment: investing money in real (tangible) assets, such as businesses and property, helping to stimulate the economy and create jobs directly.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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