African nation is changing its banking rules to allow lenders to operate under Islamic law
Uganda has received applications from three Islamic banks in the Middle East to offer Shariah-compliant financial services in the country.
“The Middle East investors can start operations either by acquiring a local bank or setting up a new Islamic bank in the country,” Grace Stuart Ndyareeba, deputy director of commercial banking at Bank of Uganda, said in an interview in Jakarta on Friday, declining to name the banks.
The African nation is changing its banking rules to allow lenders to operate under Islamic law and representatives from central bank are in Jakarta to learn from Indonesia’s experience. Southeast Asia’s largest economy, home to the world’s largest Muslim population, passed a law in 2008 to allow banks to offer services that comply with Islam’s ban on interest.
Uganda hopes to pass amendments enabling Islamic finance by early 2012, Titus Mulindwa, deputy legal counsel at Bank of Uganda told reporters in Jakarta on Friday.
Mulindwa said: “We’ve been studying amendments to the current banking rules to allow Islamic banks to own assets and are looking at refining tax laws for Islamic banks to operate.”
Around 12 percent of Uganda’s 33 million people are Muslims, according to the Central Intelligence Agency World Factbook.
“The interest in Islamic financial services is driven by the people,” Ndyareeba said. “As the central bank, we’re facilitating their needs.”