Uganda’s Islamic banking agenda (By IFN)

UGANDA: Yoweri Kaguta Museveni, the country’s president, has thrown his weight behind the development of Islamic banking in the country, directing his officers to complete discussions on Shariah compliant financial services by the end of September this year.

He also said that he will hold talks on Islamic banking with the ministry of finance and Shariah scholars, with an aim of rolling out Islamic banking in Uganda.

The president noted that Islamic banking’s popularity is undeniable and as such, Uganda should also jump on the interest-free bandwagon.

The country’s previous attempt at dipping its toes into Islamic finance has proven unsuccessful. In July last year, a group of Gulf investors, under the ambit of the Emirates Link for Strategic Alliance, was given approval by Uganda’s central bank to takeover up to 75% of the National Bank of Commerce (Uganda); with plans to convert the bank into an Islamic financial institution.

However, those plans have been thrown into disarray following legal action by the Gulf investors against the bank for failing to transfer ownership to the investors; despite the investors already paying for a 48% share in the bank.
With Museveni, who has been president since 1986, pushing for the rollout of Islamic finance in Uganda, the country may just have a fighting chance of seeing a strong take up of the industry. With 16% of its 27 million population estimated to comprise Muslims, the idea of Islamic banking taking flight is feasible.

Additionally, with the proportion of its population living in poverty estimated at 24.5% as at 2010, according to the World Bank, the introduction of Islamic banking, given its particular appeal to the unbanked and microfinancing sectors, may well help Ugandans gain some faith in their financial system.

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