Uganda prepares to start Islamic banking in October
Uganda

By TMR / Pic By BLOOMBERG

The framework for the implementation of Islamic banking in Uganda has been developed and will be operational in October, reported Ugandan Daily Monitor.

The preparatory details are being handled by the nation’s Ministry of Finance (MoF). The country is introducing Islamic banking to provide cheap credit, the agency quoted treasury deputy secretary Patrick Ocailap.

“Parliament passed the Islamic banking law, but it lacked guidelines of how to implement it, but we have set them up and we hope that by October, Islamic banking will be operational,” he was quoted as saying at the annual Uganda Revenue Authority budget breakfast meeting.

In April, The Malaysian Reserve reported that Uganda’s newly released Islamic banking regulations seemed to have taken a leaf out of Malaysia’s books, including the establishment of a central Shariah body at the apex level.

The 18-page regulation, known as the “Financial Institutions (Islamic Banking) Regulations 2018”, called for the establishments of a Central Shariah Advisory Council at the central bank level and a Shariah Advisory Board at the individual bank level.

Both requirements are present in the regulations that govern the Islamic financial institutions licensed in Malaysia.

The newly approved Islamic finance regulation allows Uganda — the third-biggest landlocked economy in East Africa — to join peers Tanzania and Kenya in making available Islamic finance products and services to the nation with a population of 44 million, with Muslims accounting for 13%.

In the latest development, Ocailap said the government has also negotiated for US$20 million (RM80 million) from the African Development Bank to capitalise Uganda Development Bank so that Ugandans can have cheap access to capital equipment to mechanise agriculture and promote value addition, the report added.

Uganda will be one of the nations to move the agenda for Islamic finance. — TMR