KAMPALA, October 18, 2023 – The inaugural Islamic Finance Conference takes place tomorrow in Kampala, according to Moses Emuron, Manager, Business Development & Risk Management at BDO East Africa Uganda.
“BDO, Signum Advocates, and MESA Advocates are hosting the first Islamic Finance Conference on Thursday, October 19, 2023,” says Emuron in an email seen by this news website.
The conference comes after Deputy Governor, Bank of Uganda [BoU], Michael Atingi-Ego on September 8, 2023, issued the first Islamic banking licence to Salaam Bank Limited, marking the launch of the unconventional banking system in the country.
This is after Salaam Bank Limited applied over one year ago to acquire Top Finance Bank and to offer Islamic banking services in Uganda. While their acquisition of Top Finance Bank was granted, the commencement of Islamic banking services was stayed pending an amendment to the Islamic Banking Regulatory Framework in the Financial Institutions Act 2004 and related tax laws, which was completed in August 2023.
Emuron continues: ‘Islamic finance in Uganda was established through the 2016 Financial Institutions Act Amendment. This change led to the creation of the Financial Institutions (Islamic Banking) Regulations in 2018, which govern Islamic finance in Uganda. These regulations enable the Bank of Uganda to grant licenses for operating Islamic banks or for traditional banks to offer Islamic finance services through an Islamic banking window. Additionally, the law established Sharia boards to ensure that products comply with Sharia principles.’
Emuron says the conference is intended to create awareness of the underlying principles of Islamic Finance that are inclusive, balanced, and sustainable to foster economic development.
About Islamic banking
Islamic banking is a form of banking that follows the principles of Islamic law [Shariah] and prohibits interest, speculation, gambling, and other activities that are considered unethical or harmful by Islam. Islamic banking has several benefits such as:
Fairness that benefits customers based on the concept of risk-sharing and profit-sharing between the bank and the customer. This means that the bank does not charge interest on loans, but rather shares the profit or loss of the business venture with the customer which encourages cooperation and trust.
Fostering financial inclusion through its accessibility to anyone who wants to conduct their financial transactions in accordance with Shariah principles, regardless of their religion, ethnicity, gender, or social status. Islamic banking does not discriminate against anyone based on their income level, credit history, or collateral while the products and services offered can cater to the needs of different segments of society.
Promoting stability in investments through the avoidance of investing in speculative or volatile markets that are prone to fluctuations and uncertainties. Islamic banking also avoids investing in businesses that involve harmful or prohibited products or practices, such as alcohol, gambling, pornography, weapons, etc. Islamic banking only invests in real assets and productive sectors that have a positive impact on the economy and society. This ensures that the investments are stable, ethical, and sustainable.
Accelerating economic development by providing financing for various sectors and industries that create employment, income, and wealth for society. Islamic banking also supports entrepreneurship and innovation by providing funding for new and emerging businesses that have a potential for growth and social benefit. Islamic banking also promotes social responsibility and environmental protection by encouraging businesses to adopt ethical and eco-friendly practices.
According to BoU Deputy Governor Atingi-Ego, the introduction of Islamic banking in Uganda marks a pivotal moment in Uganda’s financial landscape, unlocking fresh investment opportunities for Foreign Direct Investments [FDI] into this segment of the financial sector, and funding avenues for businesses and individuals through new products, thereby fostering financial sector development.
https://thecooperator.news/mps-pass-bill-to-kick-start-islamic-banking-in-uganda/
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