Islamic banking, which follows the principles of Shari`ah, has been officially launched in Uganda after 23 years of lobbying and postponement. The service aims to provide financial services that align with Islamic principles to a broader range of people, including the Muslim community in Uganda.
- The launch of Islamic banking is considered a significant milestone for Uganda. Approximately 15% of the population in Uganda is Muslim, and some individuals have been hesitant to engage with conventional banking due to religious reasons. Islamic banking offers them an opportunity to access formal financial services and participate in the financial sector.
- Islamic banking is expected to cater to the needs of the business community that has been reluctant to embrace conventional banking practices. One of the main reasons for this reluctance is the charging of interest, which is not compliant with Shari`ah. By offering interest-free financial solutions, Islamic banking aims to attract a wider customer base.
- The introduction of Islamic banking is viewed as a means to promote financial inclusion in Uganda. It is expected to encourage individuals who were previously unbanked or excluded from the formal financial sector to open accounts and engage in financial transactions. This will contribute to the overall development and growth of the economy.
- Islamic banking is characterized by its adherence to ethical principles, including the prohibition of interest. This makes it a more sustainable and ethical form of banking. The principles of fairness, transparency, and direct linkage with economic activity are emphasized, attracting individuals from various religious backgrounds.