KAMPALA — President Museveni has officially launched the national operations of Salaam Bank in Uganda.
This is as he joined the Muslim fraternity for Duwa Prayers at Kololo Independence Grounds on Wednesday, March 27.
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Salaam Bank Uganda, a subsidiary of a Djibouti-based bank, received the licence at the central bank late last year after Ugandan parliament passed legislation to authorise Islamic banking, which president Yoweri Museveni signed into law in August 2034.
The legislation removed the requirement to establish a “central sharia advisory council”, which the Bank of Uganda had opposed.
“I welcome you Salaam Bank to Uganda. This is a big market. The population of Uganda is 48 million now,” the President said during the national launch held at Kololo Independence Grounds on Wednesday.
“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.
Islamic Banking is a phrase used to refer to the banking services that follow Islamic principles, which bar the charging of interest on a loan (RIBA)
Instead, it provides for the lender to take interest in the beneficiary project and at the end of it, share in the profits or losses of the project.
Apart from the reduced risk of failure to pay back, enterprises get an additional advantage of expert or technical contribution by the lender who ensures the success of the credit.
“Islamic banking has the potential to make a significant contribution to the development of Uganda’s financial sector by bringing more Moslems to the money economy,” the President said.
In Islamic banking, banks and their customers are considered partners who share profits or losses based on a predetermined and agreed-upon ratio.
This practice demands full disclosure or minimal information asymmetry between both parties.
HE Mahamoud Ali Youssouf, the Minister of Foreign Affairs of Djibouti who led the Djouboutian delegation to Uganda underscored, the inspiring ambition of the Salaam group to broaden the scope of its activities all over the continent.
