Uganda’s President, Yoweri Museveni, announced that he has directed the Minister of Finance to issue a statutory instrument within two weeks concerning the interest rates charged by money lenders.
Museveni expressed concern over money lenders in Uganda charging a 20 percent monthly interest rate on loans, which he believes is contributing to high suicide rates among young people.
This call for action comes in response to growing concerns over fraudulent money lenders and microfinance institutions exploiting unsuspecting borrowers with exorbitant interest rates and the intent of seizing collateral security from defaulters.
Uganda Microfinance Regulatory Authority (UMRA) has registered nearly 1,500 money lenders, according to the government.
President Museveni has previously raised concerns about the high monthly interest rates charged by money lenders.
During a retreat at the National Leadership Institute in Kyankwanzi District, he asked the Attorney General to clarify why there is no law regulating lending rates offered by money lenders.
In July this year, Speaker of Parliament Anita Among threatened to terminate Memorandums of Understanding (MoUs) between money lenders and some members of the 11th Parliament due to high-interest rates.
She accused money lenders of harassing MPs and cited their relationships as a way to hold them accountable.
Experts argue that high overhead costs faced by financial institutions have led to the necessity of higher interest rates in Uganda.
President Museveni’s directive aims to address this issue and establish regulations to protect borrowers.