The deputy governor of bank of Uganda (BoU), Dr. Louis Kasekende, has said they are finalising consultations to establish a Shariáh Advisory Council that shall regulate and supervise Islamic banking when it is finally operationised in the country.

Islamic banking model was permitted by the enactment of the Financial Institutions (Amendment) Act, 2016.

Islamic banking is a non interest system for financing projects that relies on the viability of the project and less about collateral, facilitating direct trade finance and equity joint venture partnership. Making money out of money is unacceptable, financial transactions must be asset backed, prohibition of speculative behavior, only Shariáh’-approved contracts are acceptable, the sanctity of contracts.

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The bank is a partner to the corporation or entrepreneur and they share profits and losses.

Kasekende said currently, BoU is processing three applications that have been received from entities seeking to offer Islamic banking services.

“One of these applicants, that currently offers traditional banking services in Uganda, seeks to open up an Islamic finance window; while the other two applicants that are entities outside Uganda are interested in acquiring Islamic banking licenses,” he said during BoU meeting in Masaka.

As part of BoU’s effort to increase public awareness of the Islamic banking model, Kasekende, said they are preparing details and key features.

“The details will include business activities permissible or not under Islamic banking, and what will be required of you as customers, the financial institutions that seek to offer this service, and the Bank of Uganda as a regulator,” he said.

Kasekende also announced that the construction of that new currency centre in Masaka has been completed and its awaiting official opening by President Yoweri Kaguta Museveni, July 2019.

“I express gratitude on behalf of the Board of Directors, Management and staff, to the Masaka Municipality leadership led by Mr. Kayemba, for the unwavering support extended to the Bank of Uganda in its quest to build a new currency centre,” he said.

He said the currency centre shall have the requisite capacity to serve the increasing and future demands of this economic hub.