President Museveni Launches Salaam Bank, Endorses Islamic Banking Principles

Summary:

• President Museveni launched Salaam Bank’s national operations in Uganda, endorsing Islamic banking principles. The bank, a subsidiary of a Djibouti-based institution, received its license last year. Islamic banking emphasizes profit-sharing and transparency, aiming to integrate more Muslims into the formal economy.

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President Museveni launches the national operations of Salaam Bank in Uganda, marking a significant milestone as he participated in Duwa Prayers alongside the Muslim community at Kololo Independence Grounds on Wednesday, March 27.

Salaam Bank Uganda, a subsidiary of a Djibouti-based institution, obtained its license from the central bank late last year following the passage of legislation by the Ugandan parliament to authorize Islamic banking. This legislation, signed into law by President Yoweri Museveni in August 2034, eliminated the requirement for establishing a “central sharia advisory council,” a provision which had been opposed by the Bank of Uganda.

Addressing the gathering at the national launch held at Kololo Independence Grounds, President Museveni extended a warm welcome to Salaam Bank in Uganda, acknowledging the country’s substantial market potential. He emphasized Uganda’s growing population, projected to reach 106 million in the next 26 years, and encouraged the establishment of more Islamic banks in the country.

Islamic banking operates on principles that prohibit the charging of interest on loans (RIBA), instead emphasizing shared profits or losses between the lender and the beneficiary project. This approach not only mitigates the risk of repayment failure but also facilitates technical support from the lender, fostering the success of credit ventures.

President Museveni highlighted the potential of Islamic banking to bolster Uganda’s financial sector by integrating more Muslims into the formal economy. In this system, banks and customers act as partners, sharing profits or losses based on predetermined agreements, promoting transparency and minimizing information asymmetry.

HE Mahamoud Ali Youssouf, the Minister of Foreign Affairs of Djibouti, who led the Djiboutian delegation to Uganda, emphasized Salaam Group’s ambitious plans to expand its operations across the continent.