Banking, Finance & Takaful

Uganda approves Islamic banking

UgandaUganda’s cabinet has approved the introduction of Islamic banking in Uganda. Maria Kiwanuka, the Finance Minister, said those who want Islamic banking should lobby their MPs to pass the Islamic Banking Bill 2014 into law.

She said: “What I can say is the cabinet has agreed to allow this kind of banking. It was forwarded to the parliament committee responsible and if the MPs pass the bill into law then we shall roll out.”

Kiwanuka however noted a challenge of lack of trained and skilled personnel to kick start Islamic banking or banking according to Islamic principles.

Islamic banking is banking or banking activity that is consistent with the principles of sharia and its practical application through the development of Islamic economics. As such, a more correct term for ‘Islamic banking’ is ‘Sharia compliant finance’.

Attiya Nawazish Ali, the Assistant Secretary General of Islamic Chamber of Commerce, Industry and Agriculture (ICCIA), who are helping Uganda to introduce Islamic Banking said about $1.2b is spent out globally in Islamic lending. Islamic Banking globally is growing at a 15% rate over commercial lending/banking.  About 1.3 trillion pounds is the estimated asset base of Islamic Banks and institutions by 2014.

Kiwanuka said the government will soon approve three other laws with in the Financial Institutions Amendment Act.

“We want to regulate mobile money so the bill on the transaction of mobile money business will soon be tabled.  “We also want insurance firms to start insuring agricultural loans so the Bank Assurance Bill is also in the offing,” said Kiwanuka.

Source: East African Business Week

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