Museveni to decide on Islamic banking

By Anne Mugisa

The decision on introducing Islamic banking in Uganda will be arrived at the end of next month, President Yoweri Museveni has promised the Muslim community.

Islamic banking also called participant banking is defined as banking activity that is consistent with the principles of the Islamic law (Sharia) and its practical application through the development of Islamic economics.

Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for money loans.

Investing in businesses that provide goods or services considered contrary to Islamic principles is also regarded as sinful and prohibited.

The promise to have concluded the decision on Islamic banking here followed a request by the Mufti Sheik Shaban Mubajje to the President to help the Muslims operate the system.

This was at a dinner the President hosted for the Muslims at the State House, Entebbe on Monday.

This was to congratulate the Muslims on successful completion of the fasting period expected to end this Friday or Saturday.

Mubajje said the Muslims were not getting loans because paying interest is not accepted in Islam. “We need Islamic banking in Uganda. These banks are operated in Kenya and Rwanda,” Mubajje said.

Museveni said he will consult with Mubajje and other people who know it.

He said the little he has heard about the system indicates that it is similar to the Ankole culture of lending cows where one gives another a cow and only expects a cow back years later.

He said this means that the person who borrowed the cow has cows and the owner of the cow also has a cow back after some years.

“I will ask the Sheik to come and teach me. By end of September, we shall have concluded this,” Museveni said.

In his Eid-El-Fitri message, Tumusiime Mutebile, the Bank of Uganda boss, said they had proposed amendments to the Financial Institutions Act, 2004, to permit the licensing of, and transacting by financial institutions in Islamic banking in Uganda.