President Museveni has directed the Minister of Finance to cap the interest rates charged by money lenders.
Citing Uganda’s inflation rate of 3%, the President questioned the justification for commercial banks charging 20% interest, and money lenders demanding 36% or more, calling it “pure extortion.”
To provide relief, the President announced that the PDM and Emyooga funds will serve as “the poor people’s banks,” offering loans at 12% or less within 24 months.
He has also instructed the Attorney-General to guide the Minister of Finance on criminalizing these predatory lending practices.
“I have already directed the Minister of Finance to cap the interest rates chargeable by money lenders. The inflation rate in Uganda is 3%. Why should the commercial Banks charge 20% interest? How about the money lenders charging 36% or more? This is pure extortion. I have already directed the Attorney – General to guide the Minister of Finance as to how he can criminalize this extortion.” President Museveni said
President Yoweri Museveni in September 2023 wondered how lenders were allowed to charge “20 percent interest per month”, which amounts to 240 percent annually. The President directed the Minister of Finance Planning and Economic Development to come up with a statutory instrument to operationalize section 90 of tier 4 Microfinance Institutions and Money Lenders act 2016 within two weeks to control interest rates.
He further mentioned ; ” money lenders are causing suicide to our young people, who allows them to operate? Because I wanted to cancel all the loans of the money lenders.”
Speaking at the launch of the Microfinance and Saccos Governance Forum in Kampala, some borrowers wondered why the President’s directive was not being implemented as interest rates remain high.
During a meeting with members of the Central Executive Committee (CEC) of the National Resistance Movement (NRM) at State House, Entebbe, in April 2024, President Museveni instructed the Attorney General to develop legislation to prohibit the use of National Identification Cards as collateral for loans by money lenders and other financial institutions.
This development came about after the NRM secretary general raised the issue of money lenders taking advantage of locals by confiscating national identity cards, hence hindering the registration of voters on the party’s register.
The president therefore directed the Attorney General to expedite the enactment of laws to protect individuals from the misuse of their national IDs and passports as loan collateral.
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