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Islamic banking to be licensed by year’s end – Ugandan Central Bank

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Uganda’s Central Bank has pledged to ensure all Islamic banking financial institutions are licensed by the end of the year.The Ugandan Parliament approved the Financial Institutions (Amendment) Bill, 2015 Okaying Islamic banking, and agent banking among others in August last year.

However, no license has since been issued to Islamic Banking institutions since then.

According to the Governor of Uganda’s Central Bank Emmanuel Mutebile the licensing has been slow as the bank needs enough time to sensitize the public on the importance of Islamic banking as well as the risks involved.

In an interview on Friday, Mutebile said the Ugandan Central Bank is awaiting approval of the guidelines to govern Islamic banking from Uganda’s Finance ministry before issuance of licenses commences.

Under Islamic banking, also known as Halal banking, instead of a bank imposing interest, it shares the profit it accrues with clients.

Should the business make a loss, the bank also shares the loss with the borrower.

Islamic banking does not allow charging of interests like conventional banking does.

The other African countries that have adopted Islamic Banking but are non-Islamic states are South Africa, Senegal, Botswana, Zambia, The Gambia, Eritrea, Mozambique, Kenya, Tanzania and Rwanda.

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