Government is finalising law on Islamic banking, says Kadaga

The Speaker of Parliament Rebecca Kadaga has said there are steps that have been taken by the government towards finalising the Islamic banking law, which will soon be operationalised.

Kadaga made the remarks during a function at which Kassim Nakibinge,the titular head of the Muslim faith in Uganda hosted current and recently elected Muslim MPs.

"We want to embrace this kind of banking as soon as possible because we want even the Muslims to fully enjoy financial services without going against their beliefs. and religion," she said.

Kadaga explained that the issue of Islamic banking is very important to the country adding that the law was made on time but the delay has been caused by Bank of Uganda and Ministry of Finance.

Nakibinge asked the government to consider urgent implementation of Islamic Banking if Uganda is to grow since it doesn’t require interest on loans.

He explained that the banking system will be favorable to everyone since both the borrowers and the banks grow simultaneously.

He called upon the MPs who are working on amending the Bank of Uganda Act to consult widely before passing it into law.

He said the invitation of the Muslim members of parliament was aimed at creating unity among them.

“We are here as a community irrespective of your vehicle of choice but we say we are here as Ugandans. We are here as Muslims. We are here as brothers and sisters," said Nakibinge.

Islamic Banking has recently attracted media attention and generated animated commentary from the public, with some expressing scepticism as to whether it can work in a secular country like Uganda.

Islamic Banking is a banking system based on the principles of Islamic or Sharia law.

It is underpinned in application by concepts derived from the Quran and the writings of Islamic scholars.

These concepts revolve around the value of a sound currency and fairness in transactional dealings, the latter being structured within the bounds of Sharia law.

Parties to any transaction in this banking system are obliged to conduct their business affairs, with a focus on what is permissible and lawful under Sharia law.

Consequently, transactions in Islamic Banking are often viewed as a culturally distinct, but religiously motivated form of ethical investing.