The Muslim Parliamentary Caucus has dismissed concerns that the introduction of Islamic Banking services in Uganda is an attempt to convert the population to Islam. Their response comes after the passage of the Income Tax Amendment Bill 2023 by the House, which includes provisions for the implementation of Islamic Banking products.
Asuman Basalirwa, Chairperson of the Caucus and Member of Parliament for Bugiri Municipality, clarified that Uganda is a secular country constitutionally. Therefore, fears regarding the alleged Islamization of the country through Islamic financial products are unfounded.
Basalirwa further explained that the sustainable development of Islamic finance offers economic benefits, including promoting economic growth, reducing poverty, and fostering shared prosperity. These benefits are particularly important amid threats of aid cuts from European countries following the recent enactment of the Anti-LGBTQ+ law.
Muhammad Muwanga Kivumbi, Member of Parliament for Butambala County, noted that Islamic financing can address the high-interest rates currently imposed by conventional banks and financial institutions, which hinder economic growth.
During the parliamentary debate, there were discussions about the definition of “interest” as presented by the government and its comparison to the teachings of the Quran. Muslim lawmakers insisted that interest on loans is not permissible under Islamic Financing.
Citing the Quran, the legislators explained that Riba (interest on a loan) is prohibited because Islam views loans as a means to help individuals overcome financial difficulties, rather than as a means to earn profit.
Some Members of Parliament, including Naome Kabasharira from Rushenyi County and Joseph Gonzaga Ssewungu from Kalungu County West, raised concerns about understanding Sharia Law and how Islamic financial products operate.
In response to their concerns, Speaker Anita Among assured the MPs that Parliament would organize an orientation on Islamic financing. This would enable them to better explain the concept to their constituents across the country.
Islamic banking operates under the principles of Islamic law, also known as Sharia law. It emphasizes transparency, accuracy, and the disclosure of necessary information to ensure fairness in financial and business transactions.
The Income Tax Amendment Bill 2023, which includes provisions for Islamic financing, will be sent to the President for assent. Once it receives the President’s approval, it will become an Act, enabling the implementation of Islamic financing in Uganda.
Currently, Kenya, Tanzania, and Rwanda, among other countries worldwide, have already introduced Islamic Banking and financial services.