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President Museveni has reassured Muslims that the funds allocated under the government’s Parish Development Model (PDM) program do not violate Islamic teachings against Riba (interest) and are intended to benefit communities without generating profits. Responding to concerns raised by Taqwa Islamic Sacco, President Museveni emphasized that the annual Shs100 million allocated to each parish is provided as a grant, not as a loan, thereby exempting it from interest-related concerns.
In a letter dated Monday, President Museveni clarified that the small percentage levied on the PDM funds is aimed at ensuring the stability of the program amid inflation challenges, rather than generating profits. He explained that the nominal interest rate, such as 5 percent, is intended to maintain the purchasing power of the allocated funds, allowing them to retain their value over time.
Addressing the operational costs incurred by Parish Saccos, President Museveni underscored the importance of generating additional funds to cover expenses such as transaction materials. By applying a small interest rate, Saccos can manage their operational costs without depleting the allocated funds, ensuring the sustainability of the program.
President Museveni contrasted the PDM funds’ approach with that of conventional money lenders, highlighting the exorbitant interest rates imposed by the latter. He noted that while traditional money lenders may charge as much as 3 percent interest per month, equating to 36 percent annually, the PDM’s nominal interest rate aims solely to preserve the value of the allocated funds, rather than generate profits.
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In light of the concerns raised by Taqwa Islamic Sacco, President Museveni extended support by providing Shs200 million to the Sacco, demonstrating the government’s commitment to empowering and assisting Islamic financial institutions.
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