Rédaction Africa Links 24 with The Observer
Published on 2024-04-03 03:17:47
President Yoweri Museveni recently inaugurated the national operations of Salaam Bank in Uganda on March 27, coinciding with his attendance at Duwa prayers alongside the Muslim community at Kololo Ceremonial grounds. The establishment of Salaam Bank Uganda, a subsidiary of a Djibouti-based institution, was made possible by the acquisition of a license from the central bank on September 8, 2023. This significant milestone followed the enactment of legislation allowing Islamic banking in Uganda, a law signed by President Museveni in August 2023.
The new legislation eliminated the requirement for a “central Sharia advisory council,” a provision that had previously faced opposition from the Bank of Uganda. During the national launch event at Kololo, President Museveni welcomed Salaam Bank to Uganda, recognizing the country’s immense market potential with a current population of 48 million, projected to reach 106 million in the next 26 years. He emphasized the importance of welcoming more Islamic banks to Uganda and commended Salaam Bank for taking the lead.
One of the key benefits of Islamic banking highlighted by President Museveni is its adherence to principles that prohibit interest charges on loans (Riba). He underscored the potential of Islamic banking to strengthen Uganda’s financial sector by integrating more Muslims into the formal economy. Islamic banking principles involve a partnership model between banks and customers, where both parties share profits or losses based on predetermined ratios, promoting transparency and reducing information asymmetry.
Mahamoud Ali Youssouf, Djibouti’s Minister of Foreign Affairs, praised Salaam Bank’s ambition to expand its operations throughout the continent during the delegation’s visit to Uganda. The chairman of Salaam Bank Limited (Uganda), Ibrahim M. Abdirahman, affirmed the institution’s dedication to ethical values that prioritize humanity and environmental protection. He highlighted the offerings of Islamic finance, including Sharia-compliant bonds (Sukuk), which provide opportunities for the Ugandan government to finance infrastructure projects without accruing interest-based debt, attracting foreign investment and fostering economic growth.
Michael Mande, the Managing Director and CEO of Salaam Bank Ltd, emphasized the institution’s commitment to ethical business practices and improving the accessibility and value of its services to benefit the local community. As Salaam Bank enters the Ugandan market, stakeholders can expect a financial institution dedicated to ethical standards and community development.
President Museveni’s support for Islamic banking in Uganda signifies a significant step towards financial inclusion and economic growth in the country. With the introduction of Salaam Bank and the implementation of Islamic banking principles, Uganda is poised to attract more investment, promote transparency in the financial sector, and integrate a larger segment of the population into the formal economy. The launch of Salaam Bank marks a new era in the banking sector in Uganda, offering unique financial solutions that align with Islamic principles and ethical standards.
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