The Uganda Microfinance Regulatory Authority (UMRA) has issued a list of online money lending applications (apps) operating illegally and traumatizing Ugandans with abnormal interest rates ranging from 28% to 37% and questionable practices of threats and blackmail.
UMRA, which is mandated to license, regulate and supervise Tier 4 Microfinance Institutions and Money Lenders in Uganda, says the online credit/loans are operating in contravention of the Tier 4 Microfinance Institutions and Money Lenders Act, 2016 and the Tier 4 Microfinance and Digital lending guidelines 2024.
Some of the apps include; iKash, Flypesa, banana app, Loango, Nile, gloan app, Boom loan, Mpacash, Cashpulse, Credit lab, Flowerloan, Wind-money, Lever credit, Cashmate, Ezee loan, Kasente, Sunlit, Wind money, Cashflow, Moji, Ozzy money, Mumu money, Kasquick, More Pesa, Muno, My loan, Real Cash, Star Loan, Get Cash.
“These unauthorized entities mostly employ the use of mobile applications and social media platforms to lure the public into borrowing from them,” UMRA said in a statement.
“The activities of these unauthorised entities further amount to non-adherence with the Consumer Protection requirements of UMRA and are an abuse of consumer data privacy. They also violate the recently issued Tier 4 Microfinance Institutions and Money Lenders Digital lending guidelines 2024. The purpose of this public notice is therefore to caution the general public to desist from transacting with unauthorized loan providers,” it added.
One victim of iKash narrates that his photo and national ID were recorded in a tiktok video which circulated alleging that he is a serial thief of motorcycles and when found should be reported to the nearest police station.
The recording came out after him delaying to pay back a debt of Shs100, 000 having been given a loan of Shs50.000 and had to give them a profit of Shs50,000 within one week.
Like other Apps, iKash stretched to the next of kin/emergency contacts of the borrower without their knowledge and consent, harassed and tormented them using their unprofessional loan recovery agents and tagged them as the dealers in the theft of motorcycles in the suburbs of Kampala.
Unlike banks and other financial institutions that ask for collateral to acquire a loan, the instant loan app requires the applicant to have a national identity card and two guarantors.
These apps are also accused of charging exorbitant interest rates ranging from 28% to 37%.
Online lenders generally source clients either through sending out unsolicited bulk text messages with tempting offers of quick-fix unsecured loans or unregulated social media advertising, or by word of mouth.
Money is wired directly to an applicant’s mobile money account. No face-to-face contact ever occurs.
Loans between Shs30,000 and Shs150,000 must be paid within eight days, and anything between Shs160,000 and Shs290,000 in 21 days, while Shs300,000 and more are given 30 days.
There is also use of unregistered mobile phone numbers during the recovery process, which could be aided by unscrupulous individuals within the security services.