Ecobank considers enrolling for Islamic banking in 2024

Officials from Ecobank gesture at the launch of their Premier banking services in Kampala on March 26, 2024. PHOTO/BUSEIN SAMILU

What you need to know:

  • This banking model is currently offered by only Salaam Bank Ltd, a subsidiary of Djibouti-based Salaam Group.

Authorities at Ecobank Uganda say they are considering to start offering the product this year.

President Museveni is due to officially launch Islamic banking in Uganda on Wednesday.

Speaking to Monitor at the sidelines of their premier banking services in Kampala on March 26, the head of consumer banking at Ecobank Uganda, Timothy Kiyimba, said Islamic banking is part of their 2024 plans.

“Islamic banking is a very good proposition. Ecobank Uganda will also be considering a Sharia compliant window since we are a pan-African bank in 35 states on the continent where a good number are Franco-fone states offering a Sharia window,” he said.

This banking model is currently offered by only Salaam Bank Ltd, a subsidiary of Djibouti-based Salaam Group which received an Islamic banking licence from the Bank of Uganda (BOU) last year.

Michael Mande, the chief executive officer of Salaam Bank Ltd told this publication that the population, including non-Muslims have embraced this banking system.

“For Muslims, the uptake has been good because they had never gotten this experience which is exactly in line with the Islamic principles, and the non-Muslims have understood the values of this banking,” he said.

The bank is currently offering one of the products known as debt-like financing structures; where it buys an asset on behalf of the customer and sells it to the customer at a markup. 

This category is also known as Murabahah, where the bank and the customer enter a sales contract at a Profit Mark-up, and here the customer (borrower) applies for financing to purchase an asset like land, car but the bank purchases the that property own it first before reselling it to the customer at price higher than the cost price but on a deferred payment schedule resulting in a profit.

Another active category which is yet to be offered at Salaam Bank is the Mudarabah (silent and active partner), where the bank which in this case is the silent partner enters a partnership arrangement in which the bank will provide funds to a customer/ borrower for investment in a business venture and they both later share the profits as agreed in the agreement.

Meanwhile, Grace Muliisa, the Managing Director at Ecobank Uganda told delegates that premier banking services will see customers get dedicated relationship managers, exclusive banking products, invitations to exclusive events and enhanced security and privacy.

“This service will offer more than banking to our customers. Because we understand our customers and appreciate how valuable their time, businesses and families are, we are bringing value to them,” she said.

She added that the value will come in four ways, including personalized banking which frees them from day to day interaction with the bank “because we will offer you a dedicated relationship manager.”

“We will also offer protection. We have worked with a couple of insurance companies and partners to ensure they provide this value to you. Protection will therefore come to you in the form of life, property and wealth,” she explained.