The introduction of Islamic banking and its projected impact on financial inclusion and economic development in Uganda

Islamic banks were minimally affected by the global financial crisis of 2008. This is largely attributed to their firm and sound economic principles. This has made Islamic finance a feasible alternative system of banking especially in pursuit of financial inclusion. Uganda like most third world countries has grappled with the challenge of access to credit with a big unbanked population. One of the reasons espoused in this paper for this problem has been high cost of credit access caused by prohibitively high interest rates that discourage people from attaining loans for their entrepreneurial ventures. Since Islamic banking is an interest free based mode of finance, it could have the key to unlocking the door to an inclusive economy. However, there is a desire for dedicated research and efforts from the authorities to develop an effective legal and regulatory framework for Islamic financial industry in Uganda. Attempts should be made to modify the existing structure to provide better products and quality service within the ambit of Islamic laws. While interest based banking has taken hundreds of years to mature to the level where it is today, expecting the same maturity from Islamic banking in its nascent stage will be overly ambitious. To develop an economic system truly reflective of the sacred principles of Islam, all stakeholders should understand the limitations at this stage and work towards its advancement.

Grantor dc:publisher.institution

Department of Commercial Law

Year dc:date.issued

2018

Author dc:creator

• Mutungi Muhairwe, Simon

Advisor dc:contributor.advisor

• Buthelezi, Silindile N

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/11427/28083

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/28083