Salaam Bank Uganda Marks Its First Year with Solid Performance
World Business Journal talks to Michael Mande, CEO of Salaam Bank, about the bank’s journey since it started operations a year ago, the regulatory environment and initiatives aimed at promoting financial inclusion within the Muslim population and beyond.
How did Salaam Bank navigate its first year?
We successfully integrated Islamic banking principles with the Ugandan market by offering Sharia-compliant products. Key offerings include Mudarabah profit-sharing models and Murabaha for asset financing, allowing customers fixed repayment terms with potential early repayment discounts. The Ijara leasing model lets customers lease assets with the choice to own or return them later, akin to conventional leasing. Plans are underway to introduce Musharakah (Partnership Financing) and Istisna as we expand capacity.
Our customer base has exceeded 4,000, with plans to grow further in 2025 by opening 4 new Business Centres in Makindye, Nansana, Kawempe, and Kisenyi, pending Bank of Uganda approval in 2025. We already have over 12 permanent staff members in training and about 20 contract agents ready to support. These centres will focus on promoting our Deposit, Investment and Financing products and Islamic banking education, registering customers on our tech platforms, and providing training & support and issuing Visa cards (Debit and Prepaid), with cash transactions managed by agents at the Centres.
How has the regulatory environment in Uganda adapted to support the development and integration of Sharia-compliant financing?
The Bank of Uganda has played a key role in diversifying the country’s funding sources, addressing the need for Sharia-compliant financing from the East in addition to conventional Western sources. This has led to an improved regulatory landscape that supports foreign direct investment (FDI) and large infrastructure projects. With a significant Muslim population, there is notable economic potential in this shift. Previously, Muslims used limited-capacity SACCOs for business support. Now, financial institutions can provide greater support to SMEs, boosting job creation and economic growth.
What initiatives is the bank undertaking to promote financial inclusion?
Uganda has numerous SACCOs with a greater reach than formal institutions. These are groups of like-minded individuals engaged in economic activities, familiar with each other, living in the same communities, and having a leadership structure to manage their needs. For example, if they produce commodities with 10M shillings, we might help them scale up to 50M shillings, enabling them to generate more income and benefit the entire supply chain. In areas where our presence is limited, we collaborate with these groups. The engagement with them has been positive, prompting us to soon introduce a centralised identity platform that will be accessible to all customers in those communities. This platform will allow each customer to independently track their performance and will be organised by regions, with each region managing the different districts within it.
Lastly, having acknowledged regions sensitive to their beliefs, we discussed Sharia-compliant PDM with the government. These regions prefer such solutions over conventional methods, prompting our engagement with government officials, including the head of state and Muslim leaders, to devise suitable strategies, for which we are currently awaiting their feedback.
