Islamic banking in Uganda

It was not making sense that Ugandans were denied this option to access financing under a different culture.

The most striking thing about strict Islamic banking is the sharing in profit and loss. The customer is never made to feel that they have been victimised in any way.

There is also the Arabic concept of Musharaka and Mudaraba in that the banks share in the risk and future profits of a promising project. This means they stick with you all the way.

I am not saying the western style commercial banks are bad. Simply that in this day and age, having as much options to choose from is good for business people. With Islamic banking, Uganda can now hopefully be of more interest to the larger banking names in the Middle East and Gulf States.

I suspect that there are those who have concerns about Islamic banking due to its roots in the Shari’ah law. It is true that some terms are stricter compared to conventional banking, but this is so that no one is unecessarily penalised. It all boils down to  removing the burden of interest or Riba and reducing uncertainty (Gharar) to promote economic activity. It sounds confusing, it is a worthwhile alternative to explore.

(Business Week / 28 June 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Uganda: government considers Islamic banking system

President Yoweri Museveni has disclosed that government is considering introduction of Islamic banking system in Uganda.

The President was speaking at a dinner he hosted to the Muslim community to mark the end of the Islamic holy month. The dinner was held at State House Entebbe. This is an annual event where Muslims all over Uganda are hosted by the President and the First Lady Janet Museveni.

The President was responding to remarks made by the Mufti of Uganda Sheikh Ramadhan Mubajje. The Mufti told the President that many Muslim youth were not benefiting from government projects because of the high interest rates charged by the commercial banks.

 Mufti Mubajje explained that if the country allowed Islamic banking, Muslim youth would access interest free loans from the Islamic banks which do not charge interests on their loans. The President added that cabinet was discussing the matter and that government will take a final decision very soon.

The President congratulated the Muslim community upon the completion of the Islamic holy month. He however, urged them to use their sermons to mobilize the population to fight poverty. Museveni observed the need to enable religious institutions to start income generating institutions instead of relying on offertory from the poor.

 When your followers are poor, this he said, affects the offertory and this is why in many religious institutions the people offer sugarcane and egg plants.

Museveni appealed to the people of Uganda in their respective religious organizations to support the country’s industrialization programme.

He explained that Japan, South Korea and other developed countries have reached where they are because of their industrial base. The President advised the Islamic Community to stop lamenting over the past. What you should do, he said, is to move ahead. He assured the people of Uganda that government was doing everything to ensure peace, stability and economic development.

 He stressed government efforts to eradicate poverty by creating household incomes He criticized the Ugandan media for attacking foreign investors. He explained that investors play a crucial role to the development of any country.

Museveni defended the government policy of giving land and other incentives which he said is done to attract then to invest in the country.

The Mufti of Uganda told the President that the community was committed to supporting government in all its efforts. He regretted that the Muslims did not perform Hijja last year because of the cholera outbreak.

He asked the President to ensure that health workers prevent such problems in the future. The Mufti thanked the President and the First Lady for this annual dinner.

The function was attend by the head of the Ahmadiya in Uganda, Hafzall Ahmed , Omuzaana Sarah Kakungulu mother to prince Kassim Kakungulu, Acting chief justice Justice Steven Kavuma, the Archbishop of Uganda Rt. Rev Stanley Ntagali, the Archbishop of Uganda Orthodox Church Metropolitan Yona Lwanga, cabinet ministers, ambassadors, members of parliament and investors, among others.

(New Vision / 06 Aug 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

President of uganda to decide on introducing Islamic banking in Uganda

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.

(All Africa / 15 August 2012)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com