Salaam Bank Limited has become the first financial institution in Uganda to be licenced to offer Islamic banking services in the country.
On Friday, Bank of Uganda deputy governor, Michael Atingi-Ego handed over the licence to the bank officials in the presence of the Ministry of Finance Permanent Secretary, Ramathan Ggoobi.
"The BoU is committed to providing oversight and support to Salaam Bank Limited as it embarks on this new journey. We believe that Islamic banking has the potential to make a significant contribution to the development of Uganda's financial sector," said Mr Atingi-Ego, at the handover ceremony held at the BOU head office in Kampala.
The Secretary to the Treasury, Ramathan Ggoobi described it as a big milestone to the country.
“I am happy that everyone now will participate in the formal financial sector,” Ggoobi said.
The issuance of the first Islamic banking licence follows President Museveni’s signing of the Financial Institutions (Amendment) Act 2023 last month, that paved way for the introduction of Islamic banking in Uganda.
Also known as Sharia-compliant or Islamic finance, Islamic banking is a financial system that operates under the principles of Islamic law, known as Sharia.
The introduction of Islamic banking marks a pivotal moment in Uganda's financial landscape, unlocking fresh funding avenues for businesses and individuals, thereby fostering financial inclusion.
Islamic banking will also open doors for Ugandans to take interest free loans but also the lender and borrower share profits or losses on a pre-agreed ratio.
About Salaam bank
Salaam African Bank (SAB), which is headquartered in Djibouti entered the Ugandan market last year when it acquired Uganda’s Top Finance Bank Limited (TFB).
Salam African Bank was officially opened in 2008 and since then, the bank has risen to become the largest in Djubouti.
It has since expanded to Ethiopia, Kenya and Malaysia where it opened Waafi Bank.
According to the new licence acquired from BoU, Salaam African Bank will operate Islamic banking for the next one year.
