Uganda Legalizes Islamic Banking
Tuesday, June 23, 2015
Kampala — Uganda’s Cabinet has approved the amended Financial Institutions Act 2015, which paves way for the introduction of Islamic and Agency banking in Uganda.
The Financial Institutions Act, 2004 was enacted in 2004 to repeal and replace the Financial Institutions Act, Cap. 54.
According to Jim Muhwezi, the information minister, following the recent review of the Act, some provisions in the current legislation were found to be barriers to new product development and innovations which are less costly and more consumer driven.
“For instance, the Act did not permit for the conduct of Islamic banking which has become a popular form for financial institutions and particularly significant for government which would benefit in terms of programme funding without having to incur huge fees,” Muhwezi said.
The original Act was enacted, among other things, to address the crisis in the banking sector of the late 1990s that resulted into the closure of several commercial banks.