Salaam Bank Uganda Ltd has achieved the distinction of becoming the first commercial bank to obtain a license to provide Islamic banking services in Uganda.
Salaam Bank is a subsidiary of Salaam African Bank based in Djibouti, and it expanded into Uganda through the acquisition of Top Finance Bank in August of the previous year.
Salaam’s presence in Uganda is part of its broader expansion strategy, which includes growth in Asia, particularly in Malaysia, as well as in Ethiopia and Kenya.
The issuance of the Islamic banking license in Uganda follows the signing of the Financial Institutions (Amendment) Act 2023 by President Yoweri Museveni last month.
This act paved the way for the introduction of Islamic banking in Uganda.
Islamic banking adheres to principles that prohibit the charging of interest on loans. Instead, it allows the lender to share in the profits or losses of the project funded by the loan.
This approach not only reduces the risk of repayment failure but also provides an advantage by allowing the lender to contribute technical expertise to ensure the success of the project.
Dr. Michael Atingi-Ego, the Deputy Governor of the Bank of Uganda, expressed the central bank’s commitment to providing oversight and support to Salaam Bank Limited as it enters this new phase.
“Islamic banking has the potential to significantly contribute to the development of Uganda’s financial sector,” said Dr. Atingi-Ego.
Salaam Bank, in a statement, highlighted that the licenses in Uganda will now enable Ugandan nationals to access 100% Islamic financial products, introducing high-quality products and services to the Ugandan banking market.