Uganda’s government has proceeded to approve legislation authorising Islamic banking, including the immediate licencing of Salaam Bank, indicating a growing demand for Sharia-compliant financial services and products.
According to the East African, Saalam Bank, a subsidiary of a Djibouti-based lender of the same name, formally opened its doors in Kampala last month, citing expert statements about a growing niche in need of such services.
Uganda has now joined other regional countries, such as Kenya and Tanzania, in implementing Sharia-compliant banking services and products.
Nigeria, Egypt, Gambia, Senegal, Ethiopia, and South Africa are among the African countries that have adopted Islamic banking.
Ugandan President Yoweri Museveni recently opened Salaam Bank, the country’s first Islamic banking.
Salaam, which has operations in Kenya, Somalia, and Djibouti, received an operating license from the Bank of Uganda (BoU) late last year after the Ugandan Parliament passed a Bill allowing Islamic banking in the country.
According to Nanyang Technical University, the African Islamic Finance market is worth $375 billion.
With a Muslim Population of over 250 million coupled with a growing need to fund several infrastructural development projects, the Islamic finance industry is ready to maximize the huge potential found in the continent.
Islamic finance extends beyond banking to cover many other financial areas, including insurance (Takaful), capital markets, investment funds, and other financial products and services.