President Yoweri Museveni’s government is taking measures aimed at intensifying the war against unscrupulous money lenders as it seeks to better regulate the sector which unscrupulous individuals and groups have infiltrated.
Cabinet has discussed the matter of money lenders, including the thorny aspect of money lenders holding onto national identification cards as collateral until borrowers have paid back the loans and their interests.
In April 2024, President Museveni and the Central Executive Committee (CEC) of the ruling National Resistance Movement (NRM) met at State House Entebbe to discuss major challenges in the country. The president learnt that many NRM leaders in villages across the country were among the thousands who had given their national Identification cards (IDs) as collateral for loans from money lenders.
Consequently, Museveni ordered Attorney General Kiryowa Kiwanuka to work on a piece of legislation that would make it illegal for money lenders to take national IDs as part of collateral for loans.
Now, Dr Chris Baryomunsi, the Minister of ICT and National Guidance, has told the nation that cabinet has discussed and taken a decision on the issue of money lenders who demand national IDs as collateral security.
Minister Baryomunsi ordered all money lenders and savings and credit cooperatives (SACCOs) that had taken identification cards from borrowers to return them with immediate effect. He also made it clear that no money lender or SACCO should ever again keep a borrower’s ID or passport as collateral security. They will be required to review the terms of the loans.
“It is illegal and unlawful for anyone to require a borrower to bring their ID. So that goes without saying that, those who are holding people’s IDs should return them as soon as yesterday,” said Baryomunsi in an address at the Media Centre in Kampala on June 28, 2024.
“So this is an instruction that all the moneylenders, all the SACCOs. All the institutions that lend out money should not be holding people’s IDs. And if they are holding them, please return them and negotiate afresh the kind of collateral, that person should be able to deposit.”
He also noted that the government has a responsibility to regulate and cap interest rates charged by lenders to protect citizens. Minister Dr Baryomunsi has also revealed that the government is conducting research and consulting stakeholders on ways of formulating safeguards to effectively regulate money lenders (individuals and institutions).
BE CAREFUL OF ONLINE SCAMMERS
In recent weeks, Ugandans have complained of intrusive loan apps which illegally acquire people’s contact information and send them messages, offering them loans. Dr Baryomunsi has urged Ugandans to be vigilant and avoid online scammers who refuse to seek license to do money lending and go on conning people of their hard earned money.
“We want to caution the public to be careful. Much as we promote technology and want people to go digital, we also know there are conmen who would want to fleece people of their money,” the minister said.
“So, you should be careful. For people to engage in this kind of business, they should be licensed properly, “Otherwise, anyone can just go behind a computer, behind a phone, and just claim that they are a moneylender.”
He revealed that there were efforts to ensure that the central Bank of Uganda (BoU) and the Uganda Communications Commission (UCC), work together to come up with guidelines on the issue of online lending services.
In his state of the nation address, President Museveni warned “blood thirsty parasites in the form of the unregulated money lenders who charge extortionate interest rates,” revealing that he had “already directed the Minister of Finance to cap the interest rates chargeable by money lenders.”
https://www.pearltimes.co.ugfull-speech-heres-musevenis-2024-state-of-the-nation-address/
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