Uganda Grants First Islamic Banking License as Shariah-Compliant Finance Gains Momentum
Uganda’s central bank has issued its inaugural Islamic banking license, marking a significant milestone since the country’s legislative acceptance of Shariah-compliant finance activities in June.
Salaam Bank Ltd., a subsidiary of Djibouti-based Salaam African Bank, is the recipient of this license, according to the announcement by the Bank of Uganda.
Unlocking Growth Opportunities through Islamic Finance
The introduction of Islamic finance, which prohibits interest charges, holds the potential to drive substantial growth in East Africa’s third-largest economy. It offers an attractive financial alternative for customers who have previously avoided traditional lenders due to religious beliefs.
Globally, Shariah-compliant assets represent one of the fastest-growing financial instruments and are projected to reach $3 trillion worldwide in the coming decade, up from approximately $2.1 trillion at the end of 2016.
Deputy Governor Michael Atingi-Ego of the central bank expressed confidence in the potential of Islamic banking to significantly contribute to the development of Uganda’s financial sector. This move is expected to diversify the financial landscape and attract a broader customer base, ultimately fostering economic growth.
Salaam Bank’s Entry and Expansion Strategy
Salaam African Bank entered the Ugandan market last year by acquiring Top Finance Bank Ltd. This strategic move is part of the bank’s broader expansion efforts across East Africa. The Ugandan parliament’s authorization of Islamic banking in June paved the way for this development.
The issuance of Uganda’s first Islamic banking license not only aligns with global trends but also positions the country to tap into the expanding realm of Shariah-compliant finance, presenting new opportunities and choices for its financial sector and customers.
Subscribe to BNN Breaking
Sign up for our daily newsletter covering global breaking news around the world.