In a significant financial milestone, Salaam Bank Uganda Ltd has achieved the distinction of becoming the first commercial bank in Uganda to receive a license for providing Islamic banking services.
Salaam Bank Uganda Ltd, a subsidiary of Salaam African Bank of Djibouti, achieved this milestone through its acquisition of Top Finance Bank in August of the previous year. The expansion of Salaam Bank into the Ugandan market followed its successful ventures in Asia, particularly in Malaysia, as well as its presence in Ethiopia and Kenya.
This groundbreaking development in the Ugandan banking sector closely follows the signing of the Financial Institutions (Amendment) Act 2023 by President Yoweri Museveni just last month. The amendment 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 offers a unique approach where the lender becomes a stakeholder in the beneficiary project. They share in the profits or losses of the project, thus reducing the risk of loan default. Additionally, the lender provides expert or technical contributions to ensure the project’s success.
Dr. Micheal 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 embarks on this pioneering journey. He highlighted the potential of Islamic banking to significantly contribute to the development of Uganda’s financial sector.
Salaam Bank’s entry into the Ugandan market is expected to offer nationals the opportunity to access 100% Islamic financial products, introducing high-quality banking products and services to the Ugandan market. This move represents a significant step forward for both Salaam Bank and the financial landscape of Uganda.