KAMPALA, UGANDA | NOW THEN DIGITAL — Ugandan President, Yoweri Kaguta Museveni, took a decisive stance on Thursday, directing the Minister of Finance to issue a statutory instrument within a fortnight regulating the interest rates charged by money lenders.
Expressing concern over the distressing trend of 20% monthly interest on loans, he emphasized the urgent need to halt these practices, which have tragically led to suicides among the youth.
During a gathering at Entebbe State House, President Museveni questioned the operations of these money lenders and emphasized the National Resistance Movement’s support for inflation-aligned regulations. He reiterated that such high interest rates were unacceptable, calling for immediate action.
This move follows a longstanding issue of fraudulent money lenders and microfinance institutions exploiting unsuspecting borrowers with exorbitant interest rates. The government disclosed that nearly 1,500 money lenders are registered with the Uganda Microfinance Regulatory Authority (UMRA). President Museveni had previously raised concerns about the lack of legislation to govern lending rates set by money lenders.
In related efforts to address this concern, Speaker of Parliament Anita Among had previously threatened to terminate Memorandums of Understanding (MoUs) between money lenders and certain legislators due to high interest rates. The Speaker aimed to instill discipline among money lenders whom she accused of harassing MPs.
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Historically, lending rates have averaged around 21% since the early 1990s, driven primarily by the substantial overhead expenditures faced by financial institutions. Experts argue that higher interest rates have become a necessity for lenders to counter these costs, prompting a call for regulatory intervention.
While chairing the NRM Caucus at Entebbe State House this afternoon, I directed the Minister for finance to put out a statutory instrument within two weeks on the interest paid to money lenders in accordance with the inflation which the NRM will support. These moneylenders who… pic.twitter.com/EEF3iWLI3b
— Yoweri K Museveni (@KagutaMuseveni) September 28, 2023
