Bank of Uganda (BOU) Governor Emmanuel Tumusiime Mutebile has said that the Central Bank will begin licensing Islamic Banking financial institutions before the end of 2017.
This, Bank of Uganda had promised to begin issuing licenses to Islamic banking institutions at the end of 2016.
Mutebile says there is need to give time to the public to appreciate the benefits and risks in Islamic Banking before licensing begins.
Some of the Christian Religious leaders last year wrote a petition calling against plans to allow Islamic Banking.
Mutebile was today addressing an Islamic Banking orientation workshop for Members of Parliament held at Parliament. The workshop was organised by the Parliamentary Forum on Islamic Banking and Finance.
The Governor disclosed that the regulations that will govern the Islamic banking in the country have been submitted to the finance ministry and are awaiting clearance.
The regulations follow President Yoweri Museveni’s assent to the Financial Institutions (Amendment) Act 2016 that brought into force Islamic Finance subject to the establishment of a Central Shariah Advisory Board in the Central Bank.
Sulaiman Lujja, a member on the Islamic Banking Committee in Tropical Bank told legislators that it’s possible to transform Uganda into a regional Islamic banking financial hub.
Lujja says that this is possible because despite the fact that Uganda was the last country to adopt the practice in Africa, it is the only country which has embedded the practice into its legal framework.
The other African countries that have adopted Islamic Banking but are non-Islamic states are South Africa, Senegal, Botswana, Zambia, Eritrea, Mozambique, Kenya, Tanzania and Rwanda.
Lujja noted that among the several benefits of Islamic Banking, the poor who have no collateral but have vibrant business ideas will be able to obtain funding. He said that this is made possible because under the practice the bank takes on part of the risk and shares in the profits or losses.
Lujja also noted that Islamic Banking is executed under the Sharia law which views as unethical practices like charging interest or speculation.
Mohammed Nsereko, the secretary of the Parliamentary Forum on Islamic Banking and Finance also briefed legislators about Islamic Banking.