Bank of Uganda has started working on the proposed amendments to the Financial Institutions Act, 2004 in a bid to permit the licensing of, and transacting by financial institutions in Islamic banking in Uganda. Many other East African countries like Kenya and Rwanda already have Islamic banking in place. The governor Bank of Uganda Tumusiime Mutebile says that Islamic banking can work in Uganda as long as there are a few amendments to the Financial Institutions Act.

The amendments to the Financial Institutions Act, 2004 come days after president Museveni told Muslims that the decision on introducing Islamic banking in Uganda will be arrived at in September this year.

Islamic banking is defined as banking activity that is consistent with the principles of the Islamic faith/law (Sharia). Sharia law prohibits fixed, floating payment or acceptance of specific interest fees for money loans.