Ugandans urged to fully utilise Islamic banking as Salaam Bank secures BoU license

The permanent secretary to the treasury Ramathan Ggoobi has urged Ugandans to fully utilise Islamic banking regardless of their faith.

Ggoobi made the call on Friday at the signing and handover ceremony of the operating license by Bank of Uganda (BoU) to Salaam Bank Limited.

Salaam Bank, formerly Top Finance Bank, has now become the first financial institution in the country to be granted a license by BoU to offer Islamic banking services.

Speaking during the handover/signing ceremony, Ggoobi, noted said there is need for Ugandans to fully utilise Islamic banking, noting that it is crucial in providing funding solutions to a section of business community that has been reluctant to use conventional banking due to the charging of interest, which is not Shariah compliant.

“I am happy that Islamic banking will allow everyone to participate in the formal financial sector. And I call upon the banking sector to introduce Shariah-compliant financial products to meet the demands of our population,” Ggoobi said.

He expressed optimism that the addition of Islamic banking to Uganda’s financial services menu will play a role in advancing the national vision 2040, which aims to transform Uganda into a modern and prosperous country.

“Therefore, I want to emphasise the need to develop an Islamic finance ecosystem, which should include Islamic insurance (Takaful) as one of its components.” he emphasised.

In his remarks, Salaam Bank CEO, Mande expressed gratitude, thanking all stakeholders that participated in the meticulous process that enabled the creation of a legal frame for Islamic banking to finally take off in Uganda.

“From the government through the Ministry of Finance, our regulator Bank of Uganda, the parliament of Uganda and all sector players that made this possible, today marks a giant step for us all. Salaam Bank, may be the first to be licensed to offer Islamic Banking solutions in Uganda, but this victory is for every Ugandan,” Mande said.

He noted that while the occasion called for a major celebration, it also signified the work ahead for all the sector players.

“The baton is now in our hands. It’s time to walk the talk. Having obtained the greenlight from the central bank, we are now finalizing the constitution and eventual approval of sharia’ah board, a key organ required by the law to operate an Islamic bank.” he said.

BoU deputy Governor Michael Atingi-Ego remarked that the fact that the Islamic banking is based on the principles of Shariah, which prohibits the charging of interest, makes it a more ethical and sustainable form of banking, and it is well-suited to the needs of many Ugandans.

“I am particularly pleased that Islamic banking is not limited to Muslims. This financial offering can benefit everyone, regardless of their religious beliefs.”

He added, “Of course, there are risks associated with any new venture. However, I am confident that Salaam Bank Limited has the expertise and resources to manage these risks.”

He expressed BoU’s commitment to providing oversight and support to the bank as it embarks on this new journey.

Headquartered in Djibouti, Salaam Bank entered Ugandan market last year when it acquired Uganda’s Top Finance Bank Limited (TFB).

The bank also has presence in Ethiopia, Kenya and Malaysia.