Museveni launches Uganda’s first Islamic Banking Institution

President Yoweri Kaguta Museveni has launched Salaam Bank, Uganda's first-ever licensed Islamic Banking institution.

Islamic banking is a form of banking based on Islamic principles. Basically, in Islamic banking, it is not allowed to pay and receive interest but rather it is based on profit sharing. Islamic banks focus on generating returns on investments through investment tools that are “Sharia” compliant.

The President launched the bank today during Ramathan dua prayers organised by the Office of the National Chairman-NRM at Kololo Ceremonial Grounds.

Speaking during the event, President Museveni wished the Muslims a fruitful Ramathan and prayed that God protects them.

He also reiterated his call to believers to make sure that they take part in income-generating activities to improve their livelihoods.

“Where I come from in Ntungamo, we don't entertain laziness. As a norm on that side, every person must have what he/she does like rearing animals, growing crops, fishing, manufacturing and artisanship. Therefore, when I got an opportunity to lead Uganda, I started to encourage you to fight poverty and create wealth,” he said.

“We said there are four ways through which a person can fight poverty. The first sector is commercial agriculture, then manufacturing, the third sector is services like transport, hotels, among others and finally ICT.”

He however noted that all those avenues need capital that is why the government has been coming up with several interventions like Entandikwa, NAADS, Operation Wealth Creation, Emyooga and Parish Development Model (PDM) to enable Ugandans to get the necessary start-up capital.

“These were in the form of grants, and they had nothing to do with riba (interest). The riba issue came into place recently when we launched the Parish Development Model.”

He however assured Muslims that shortly he will have a meeting with their leaders so that they discuss PDM and riba and how Muslims can benefit from the program without any limitations.

“If you convince me that the PDM and Emyooga money have some contradictions as per the Islamic teachings, then I will find a way how to send your money directly to this bank.”

President Museveni further said as the NRM, they don't believe in discrimination, and they serve all Ugandans equally irrespective of their religions or tribes. He said such attribution has enabled the country to develop socially and economically.

“When Amin left, those of Lule dislodged Uganda from the Organization of Islamic Cooperation (OIC) saying that the majority of Ugandans are not Muslims but when we took over power, we readmitted the country back to OIC. I told them that some of my people are Muslims so they must belong to such an organisation and it was also not a taboo to belong to OIC even if you are not a Muslim. We believe in politics of interest not identity,” he said.

“When the Islamic University in Uganda was beginning, some people were against it. I said no, leave it to operate. Now, it has produced so many graduates of different professions including non-Muslims. When they told me about Islamic banking, I told them I had no problem with it. I said we should let them operate and that is why we have Salaam Bank now.”

President Museveni also welcomed the bank to Uganda, before assuring them of support to smoothly run their operations in the country.

“I welcome Salaam Bank to Uganda. This is a big market with a population of 48 million now and in the next 27 years, the population of Uganda will be 106 million. You are going to start right away to serve the people of Uganda,” he said.

The Minister of Foreign Affairs and International Cooperation of Djibouti who led the Djiboutian delegation to Uganda, Mr. Mahmoud Ali Youssouf, extended warm greetings of the President of Djibouti, H.E Ismaïl Omar Guelleh to President Museveni.

Mr. Ali Youssouf underscored the inspiring ambition of the Salaam Group to broaden the scope of its activities all over the continent including Uganda which he said has a safe and solid financial institution.

The ONC Manager, Hajjat Hadijah Uzeiye Namyalo thanked President Museveni for loving and always supporting Muslims in the country.

She also thanked the President for economically empowering Muslims by granting them an Islamic Bank.

“Your Excellency, you are the true definition of a God-sent leader who feels empathy for us the poor. Your Excellency, we are all gathered here because you love us and we love you too and for a particular purpose, you are ready to empower us,” Hajjat Namyalo said.

The Wakiso District Kadhi, Sheikh Erias Kigozi who spoke on behalf of Muslims, thanked President Museveni for being a hero, a patriot, a parent and a visionary leader with a mission and an ambition.

“We thank you for being a good leader who thought of us Muslims and made it possible for us to have our bank in line with the Sharia law,” he said.

He also commended President Museveni for fighting and protecting the property of Muslims in the country.

“We also thank you for reappointing our fellow Muslims like Hajjat Rukia Nakadama, and Hajjat Minsa Kabanda, among others to Cabinet.”

The Board Chairman of Salaam Bank, Mr.  Ibrahim M. Abdirahman informed the President that he signed the Islamic bank regulations into law at a time when the Islamic community needed it.

“Indeed, you have been a true friend of this community. This licence for Salaam Bank was handed over to us on the 8th of September 2023, which was the birthday month of Your Excellency, Mr. President, we sincerely thank you for supporting us wholeheartedly. The establishment of an Islamic Bank marks a significant milestone in Uganda's journey towards economic empowerment and inclusive financial growth,” he said.

“Islamic finance offers among others, Shari'a compiled bonds from which the government can raise capital for various infrastructure and projects. We are hopeful that the government of Uganda will embrace this opportunity because of its immense benefits.”

In September last year, the Bank of Uganda granted its first Islamic banking license to Salaam Bank Uganda Ltd, a subsidiary of a Djibouti-based bank after Parliament passed legislation to authorize Islamic banking, which President Museveni signed into law in August 2023.

The event was also attended by Salaam Bank officials, Ugandan government officials, and religious leaders, among others.