Resolve Islamic Banking delay, Finance minister directs BoU

Thursday August 06 2020
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Whereas the Central Bank has gone ahead to establish products such as agent banking, the Muslim community says, it has frustrated Islamic Banking yet they were introduced under the same law. Photo | File

Finance Minister Matia Kasaija has said that whereas Bank of Uganda still has challenges, it should work around the clock to quickly resolve the pending establishment of Islamic Banking.

Speaking in an interview on Tuesday, Mr Kasaija told Daily Monitor: “I have just finished talking with Bank of Uganda and I am told that we have some technical, legal and personnel problems that are holding us back, but we will solve this.”

Mr Kasaija also noted that whereas he was aware of the discontent created due to the delay, he was in discussions with Bank of Uganda to quickly end the delay.

He also said that, as government, they had done their job to pass the law and it was now the work of the Central Bank to operationalise the Shari’a-based banking system.

In 2016, government enacted the law that would introduced Islamic Banking, agent banking and bancassurance, among other products. However, whereas other products have already been established, implantation of Islamic Banking continues to be delayed.

Last Friday, Daily Monitor published a story in which the Muslim community accused the Central Bank of frustrating the implantation of Islamic Banking, noting that Bank of Uganda has refused to put in place the Central Shari’a Advisory Council, a key operationalisation facet in the setup.

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The Central Shari’a Advisory Council, according to Bank of Uganda, oversees regulation and supervision as well as instituting a legal and policy regime of Islamic Banking.

In a document authored by Uganda Muslim Supreme Council on behalf of the Muslim community, leaders across the divide, said the delay has caused “prolonged suffering” on the excuse that Bank of Uganda had failed to find the two Shari’a scholars to compose the Central Shari’a Advisory Council.

However, in the document, the Muslim community noted: “Bank of Uganda should not have any excuse in finding the two Shari’a, scholars as specified by the law,” listing about 10 technically suitable Shari’a scholars from which, the document said, the Central Bank would choose from.

The listed scholars included 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, the second deputy mufti, Uganda Muslim Supreme Council and Dr Sowed Juma Mayanja, a lecturer at Makerere University.

Others are Dr Muhammad Kisuule, 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.

However, in the interview on Tuesday, Mr Kasaija had pointed out that Bank of Uganda had informed him of personnel challenges as the main cause of the delay.
In a brief email on Tuesday, Ms Charity Mugumya, the Bank of Uganda director communications, told Daily Monitor without giving any details: “The Minister of Finance will be giving a statement on Islamic Banking.”

Islam banking
Islamic Banking, unlike conventional banking, promotes equitable share of profit and losses. The system eliminates interest rates on loans and deposits and is currently being implemented by international financial hubs.
Last year, the Central Bank indicated that it had been evaluating three applications from a local and two foreign banks to practice Islamic Banking in Uganda.
Other banks, according to people familiar with the matter have also applied to offer Islamic Banking in Uganda.

iladu@ug.nationmedia.com

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