Salaam Bank, Weli Travel innovate new Islamic financing model

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In a move aimed at easing financing for those seeking to travel for Mecca, Salaam Bank Uganda and Weli Travel have launched "WeliEasy Pay," Uganda's first Hajj and Umrah financing model.

This innovative product aims to make Hajj and Umrah more affordable for all, providing a convenient way to finance the pilgrimage. The partnership was unveiled on Friday during a dinner held at Sheraton Kampala Hotel, officiated by Justice Muzamil Kibeedi of the Supreme Court.

The partnership between Salaam Bank and Weli Travel has been described as timely and a significant step towards modernising the Hajj and Umrah experience, making it more accessible and manageable for pilgrims and their families.

According to Mariam Najjingo, the marketing and communications executive at Salaam Bank, the product is developed in line with principles of the Sharia law, where a borrower is not charged an interest on whatever the bank offers.

“Through this product, we are looking to ease access to financing for those burdened by financial barriers when it comes to traveling to Mecca. We shall be covering 70% of the total travel cost and the money is repayable in one year from the time the individual returns. We hope it's going to benefit a lot of Ugandans, especially those who have been having barriers to accessing Sharia compliant financing,” Najjingo explained.

She added that in the wake of the need to innovate in the banking sector, they had to prioritise where their strength lies and had to select a reputable partner in Weli Travel.

“One only opens an account with us and makes a 30% contribution, then we cover the rest. Islamic financing works in a way that, especially for this particular contract called Murabaha, we buy the tickets from Weil and resell them,” she added.

Mohammed Abdul Ali, the director and co-founder of Weli Travel, commended the partnership, which he said is timely as it allows the customers access financing and pay later.

“This is an opportunity for everyone who has ever dreamed to go for Hajj or to go for Umrah to finally do it. In Islam, we do not charge interest, and we don’t offer loans, but it’s called Murabaha, a bank lending system that relies on cost-plus pricing rather than interest charges to avoid violating Islamic laws against predatory lending,” Ali highlighted.

The Murabaha system avoids charging interest, which is forbidden under Islamic law. The transaction is a sale, not a loan. The bank buys the asset and then sells it to the customer, who pays for it in installments.

Salaam Bank Uganda was launched by President Yoweri Museveni as Uganda's first licensed Islamic bank. It offers Shariah-compliant, interest-free banking services, including savings, financing, and diaspora banking.

The bank was launched to address the needs of the Muslim community, which constitutes about 14% of Uganda's population.

During the launch in 2024, President Museveni emphasised the importance of Islamic banking for the Muslim community and encouraged them to participate in income-generating activities to improve their livelihoods. The bank's operations follow Islamic principles, focusing on profit sharing rather than interest payments.