Museveni wrong on Riba in PDM, says Dr Twaha Kasule
A senior Muslim scholar has dismissed President Yoweri Museveni’s guidance on Riba in the administration of the Parish Development Model (PDM) program.
Riba, an Arabic word meaning “to increase” or “to exceed,” refers to unequal exchanges or charges for borrowing, which are forbidden by Islamic law.
Under the program, Shs 100 million is sent to each Parish every year and it is shared among registered Saccos which engage in income generating activities.
A number of Muslims are concerned that the interest charged on funds released by government under the PDM is Riba, and are hesitant to participate in the household development program.
But Museveni, in a letter addressed to Taqwa Islamic Sacco in Mukono, urged this stand is misguided, noting that the interest element in the PDM cash is aimed at ensuring that inflation does not erode the value of the loan.
“… Gavumenti ya Uganda eraamira abaana baayo mu buli muluka shillings 100 million buli mwaka (The government of Uganda wills Shs 100 million per parish per year). This is not a loan by government to the parish Sacco. It is a grant (kuwa buwi-just giving). Does the Quran say that Omuzadde talaamira baana be (A parent cannot give by will whatever he wants to his/her children?),” Museveni asked.
In response, Dr Twaha Ahmed Kasule, the Director Kampala Campus at the Islamic University in Uganda (IUIU) says the President’s view of Riba is wrong.
“Riba is any addition over and above the principal amount lent or borrowed. It doesn’t matter whether the additional is small or large. The President seems to argue that because of inflation and administrative costs, the mild 5% is okay and is not Riba. This does not make Riba acceptable,” Dr Kasule told The Friday Call in an interview.
The Scholar called for the amending of the operational framework of the PDM.
“The problem with the PDM is that it is exclusively based on the conventional business model of lending with interest. In this way, it will never be compatible with Islam,” he said.
Dr Kasule advised that several Islamic finance principles can be adopted to make the PDM more inclusive.
“The Islamic Finance Business Model based on Profit and Loss Sharing, or Cost plus Sales is what is needed to sort out the Riba issue. PDM could be improved to operate both ways. Once you apply the Islamic finance system, you don’t have to worry about inflation and operational costs as the president argues,” Dr Kasule said, adding “This is because there will be a return on every transaction, which will enable the SACCOS not only to maintain the Ush 100 million, but also to grow the fund to bigger amounts.”
