A group of religious leaders petitioned President Museveni right after the Financial Institutions (Amendment) Bill 2015 was passed on January 6, 2016
This system came to the lime light with hope that it would stimulate business expansion and start-ups since most of these have been hampered by high interest rates offered by local financial institutions.
In the statement obtained by The Observer and signed by the Arch bishop of Church of Uganda Stanley Ntagali as chair of the Uganda Joint Christian Council, Church leaders urged that this amendment “will have far-reaching implications beyond the suggested purpose of finance,” hence the President should reassess endorsing it.
They [Church leaders] emphasized that this bill paves way for inclusion of Islamic banking, agency banking, and bancassurance in Uganda’s financial sector.
This petition however, holds no hope of dawn as current updates indicate that the President has assented to this Financial Institutions Bill 2015, part of which now allows introduction of the Islamic banking system.
Mrs Linda Nabusayi, the President’s media assistant has confirmed the development.
Why Church Leaders Disapprove of the Amendment
One of the principles of Islamic Banking also known as “Sharia compliant finance” is that it prohibits acceptance of interest or fees for loans of money (known as Riba), whether the payment is fixed or floating.
“We regret to note that the introduction of Sharia law in the country opens door to the ultimate operationalisation of fully-fledged Sharia not only in the finance sector as contained in the bill but in all aspects of our national life,” read the church leaders’ letter.
As they advise, Sharia law is hinged on unique legal principles which are in many ways contrary to Uganda’s constitution.
The Islamic Banking system also prohibits investment in some businesses that provide goods or services considered contrary to Islamic principles such as pork or alcohol.
The letter added on to say that this would create a “legal stalemate with the Constitution of Uganda” and that all under this arrangement, all Muslims might be compelled to use only Islamic banking which may deny them the right to freedom of choice.”
“Since in this bill the central Bank seeks to establish a separate regulatory body to oversee Islamic banking, there will be a serious challenge to harmonize this kind of banking with the traditional banking system…,” they added.
marvin@ugchristiannews.com
