President Yoweri Museveni directed the Minister for Finance to draft a statutory instrument within two weeks to regulate the interest rates charged by money lenders.
The move comes in response to concerns that exorbitant interest rates have led to financial distress, including cases of suicide among young borrowers.
The President expressed his dismay at the high interest rates, questioning why individuals are allowed to charge as much as 20% interest on loans per month.
He emphasized the urgency of addressing this issue, stating, “These moneylenders who are causing suicide among our young people, who allows them to operate? Because I wanted to cancel all the loans of the money lenders.”
The Attorney General, Kiryowa Kiwanuka, clarified that money lenders operate under the law and are licensed by microfinance institutions overseen by the Ministry of Finance.
However, it was noted that the Ministry had not established provisions for maximum interest rates since the enactment of the Tier 4 Microfinance Institutions and Money Lenders Act in 2016.
As a result, the NRM Caucus made the decision to instruct the Minister of Finance to expedite the creation of a statutory instrument within the next two weeks to enforce Section 90 of the Tier 4 Microfinance Institutions and Money Lenders Act 2016. This instrument aims to regulate and control the interest rates charged by money lenders, potentially alleviating the financial burden faced by borrowers across the country.
President Museveni’s directive signifies a commitment to tackling the issue of high-interest rates, with a focus on safeguarding the financial well-being of Ugandans and promoting responsible lending practices within the microfinance sector.