Uganda grants first Islamic banking license

Milestone achievement follows the enactment of legislation in June, which paves the way for Shariah-compliant financial activities within the country

KAMPALA, Uganda – Uganda’s central bank has taken a significant step in bolstering its financial landscape by issuing its inaugural Islamic banking license.

This milestone achievement follows the enactment of legislation in June, which paves the way for Shariah-compliant financial activities within the country.

The recipient of this inaugural license is Salaam Bank Ltd., a subsidiary of Salaam African Bank, headquartered in Djibouti.

The introduction of Islamic finance, characterized by its prohibition of interest charges, holds the promise of unleashing substantial economic growth in East Africa’s third-largest economy.

This development is expected to attract a diverse range of customers who have hitherto avoided conventional financial institutions on religious grounds.

It’s worth noting that Shariah-compliant financial instruments are among the world’s most rapidly expanding assets.

Experts indicate that they could reach a staggering $3 trillion on a global scale over the next decade, up from approximately $2.1 trillion at the close of 2016.

Michael Atingi-Ego, the deputy governor of the central bank, expressed optimism about the potential of Islamic banking to make a significant contribution to Uganda’s financial sector.

Salaam African Bank strategically entered the Ugandan market the preceding year through its acquisition of Top Finance Bank Ltd.

This move aligns with the institution’s broader strategy to extend its presence in East Africa.