Bank of Uganda accused of frustrating Islamic banking

Friday July 31 2020
finance01pix

Muslims claim Islamic Banking is being deliberately frustrated, five years since the law creating it was signed. Photo | File

Bank of Uganda (BoU) has been accused of frustrating Islamic Bank, five years after the law allowing operationalisation of the Shari’a-backed banking system was passed.

In a statement seen by Daily Monitor, the Islamic leadership across the divide, said BoU’s failure to establish the Central Shari’a Advisory Council, five years after the law was passed, is a deliberate move to frustrate the final lap of establishing Islamic Banking.

The statement also dismissed suggestions that there is an insufficient pool of experts to form the Central Shari’a, Advisory Council.
“We wish to expose (sic) our prolonged suffering caused by Bank of Uganda's delay to establish this council [Central Shari’a, Advisory Council]. This has taken almost five years since the law was passed. Bank of Uganda should not have any excuse in finding the two Shari’a, scholars as specified by the law,” the statement reads in part, highlighting at least “10 technically suitable local Shari’a scholars, where it [Central Bank] can choose from”.

Some of the scholars listed include, Dr Sulaiman Lujja, the Tropical Bank head of Islamic Banking, Dr Abdul Hafiz Walusimbi, the IUIU head of Shari’a, Dr. Anas Abdunoor Kaliisa, the director, Salaam Charity, Sheikh Muhammad Ali Waiswa, second deputy mufti, Uganda Muslim Supreme Council and Dr Sowed Juma Mayanja, a lecturer at Makerere University.

Others are Dr. Kisuule Muhammad, director House of Zakat, Dr Rashid Semuddu, consultant, Dr Ediriisa Kasozi, deputy dean and head of department Islamic Law, Faculty of Law, Yahya Kasujja, Senior associate account, Islamic Development Bank and Sheikh Ismail Njuki, director, Madina International Development Agency.

The statement, headlined: How the delay in establishing the Central Shari’a Advisory Council at Bank of Uganda has Frustrated Islamic Banking, also noted that it was unfortunate that all the “amendments that were passed in the law in 2016 (such as agent banking and bancassurance, have been established except Islamic Banking.

Advertisement

Efforts to get a comment from Dr Adam Mugume, the BoU executive director research, were futile as questions sent to him and the central bank’s communications department remained unanswered by press time.

However, in July last year, while addressing a stakeholders meeting in Masaka, former BoU deputy governor Louis Kasekende, said, the Cenral Bank had been vetting three financial institutions, including two foreign and one local bank, that had applied to offer Islamic banking in Uganda.

Sources familiar with the matter had then told Daily Monitor that the applicants included Tropical Bank and MiSK Bank, which operates an Islamic Banking model in the Middle East.

Dr Kasekende had also indicated that BoU was finalising consultations with various stakeholders to establish the Shariáh Advisory Council before they Central Bank could issue licences to financial institutions.

The Council, according to Bank of Uganda, oversees regulation and supervision of Islamic Banking.

Kicked up a storm
Last year, while conducting the their annual general meeting, bishops under Uganda Joint Christian Council (UJCC), which brings together Anglicans, Catholics and Orthodox churches, kicked up a storm after they resolved to lobby government to stay the creation of Islamic Banking system, arguing that they do not understand its motive and how it works.

iladu@ug.nationmedia.com

Advertisement