The Mufti of Uganda, Sheikh Shaban Ramadhan Mubaje has applauded the Financial Institutions Amendment Bill, 2023, which aims to implement Islamic banking.
During the Eid al-Adha celebrations at the Old Kampala Mosque, the Mufti stated that these Halal-compliant initiatives might elevate Muslims from poverty.
Eid-al-Adha, known as the festival of sacrifice, commemorates Prophet Ibrahim's willingness to sacrifice his son to God and is a prominent date on the Muslim calendar. People worldwide celebrate this festival by sharing meat with family and those in need.
On Tuesday, Parliament passed the Financial Institutions (Amendment) Bill, 2023, permitting borrowers to obtain interest-free loans under Islamic banking if signed into law by President Museveni.
Plans for implementing Islamic banking in the country have been ongoing for over a decade, under which borrowers and lenders share profits and losses based on a predetermined ratio.
Mubaje stated that more poverty alleviation programmes that do not necessitate interest payments are necessary, as most of the current initiatives demand payment of small interests, contrary to Islamic teachings.
The Mufti believes that passing this bill into law will significantly aid in reconciling issues concerning Islamic banking products.
"We request the government to provide us(Muslims) a way to support the poverty alleviation programme which is Sharia compliant as we wait for the government to pass the law that will govern Islamic banking," he said.
The Minister for Kampala, Minsa Kabanda assured Muslims that the law is on board and will soon be operationalised.
"We (sorted)the banks which are going to practice it. The president is going to sit with Muslims to see how Muslim are going to benefit from government programmes. I want to assure you that you are going to benefit from the government programmes," she said.
She noted that many Muslims are left behind because of Riba issues which prohibits many faithful from participating in some of these government programmes.
"Islamic is a religion of peace, let's work as a team. Let's unite," she said.
Islamic Banking has recently attracted media attention and generated animated commentary from the public, with some expressing skepticism as to whether it can work in a secular country like Uganda.
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Islamic Banking is a banking system based on the principles of Islamic or Sharia law.
It is underpinned in application by concepts derived from the Quran and the writings of Islamic scholars.
These concepts revolve around the value of a sound currency and fairness in transactional dealings, the latter being structured within the bounds of Sharia law.
Parties to any transaction in this banking system are obliged to conduct their business affairs, with a focus on what is permissible and lawful under Sharia law.
Consequently, transactions in Islamic Banking are often viewed as a culturally distinct, but religiously motivated form of ethical investing.
In its sitting on Tuesday June 27, 2023 chaired by Speaker Anita Among, the Bills were passed to clear the way for the long awaited Islamic banking.
The Financial Institutions Act has been amended in section 115B (2) to remove the provision for a Shariah Advisory Council, which MPs said would be over-legislation, instead opting for Bank of Uganda to institutionally address operational issues relating to Islamic banking.
The Attorney General, Kiryowa Kiwanuka, said maintaining in the Financial Institutions Act a provision for the committee would complicate the central bank's supervisory mandate over a product it has helped to create.
"First of all, Bank of Uganda should never determine the business model of any commercial bank, it should sit outside to determine whether the product is safe for the customer; if it sits in the advisory council, who will protect the consumers?" he said.
