Prime
President warns moneylenders on excessive interest rates
Fifty thousand shilling notes go through a money counting machine in a bank. PHOTO/ Edgar R. Batte
What you need to know:
- The President revealed that he has directed the Attorney General to guide the Minister of Finance on criminalising the extortion.
President Museveni has warned moneylenders and commercial banks against charging exorbitant interest rates.
In his State-of-the-Nation Address (SONA) yesterday, Mr Museveni wondered why moneylenders charge 36 percent and more when the country’s inflation rate is only 3 percent.
The President revealed that he has directed the Attorney General to guide the Minister of Finance on criminalising the extortion.
“The inflation rate in Uganda is 3 percent; why should the commercial banks charge 20 percent interest? How about the moneylenders charging 36 percent or more? This is pure extortion,” he said.
He encouraged the people to borrow from the Parish Development Model (PDM) and Emyooga funds, which attract 12 percent interest rate, or less after 24 months.
Looking back
However, this is not the first time the President is criticising the moneylenders. In September last year, Mr Museveni revealed how he had directed the Minister of Finance Planning and Economic Development to put a statutory instrument on the interest paid to moneylenders within two weeks.
“While chairing the National Resistance Movement (NRM) parliamentary caucus at State House in Entebbe, [on September 28, 2023], I directed the Minister for Finance to put out a statutory instrument within two weeks on the interest paid to moneylenders in accordance with the inflation, which the NRM will support,” he posted on his X handle.
“These moneylenders, who are causing suicide to our young people; who allows them to operate? Why should someone charge 20 percent interest on a loan per month? This must stop,” he added.
The President’s comments follow growing concerns from the public over the high interest rates charged by some moneylenders and microfinance institutions, who entice Ugandans into borrowing with the aim of grabbing the property, which is collateral security attached to the loans when they fail to pay back.
On January 30, the government suspended the issuing of licences to digital/online moneylenders until the Ministry of Finance Planning and Economic Development was fully furnished with information on how they are regulated.
Minister’s directive
Mr Haruna Kyeyune Kasolo, the State minister for Microfinance, issued a directive to the Uganda Microfinance Regulatory Authority, which regulates moneylenders.
“These online moneylenders are untraceable and this has given them the leeway to steal from Ugandans,” Mr Kasolo said.
