Money lenders ask Uganda government to review ban on their licences  

Money lenders under their umbrella body the Uganda Money Lending Association have called on the government to reconsider its decision to suspend issuing operating licenses to digital money lenders, arguing that these are untraceable which gives them leeway to steal from Ugandans.

Mr Ben Kavuya, the chairperson of the association, says they are working to fix what he describes as a misunderstanding with the government.

“I don’t think the ban is the way to go. Consultations should be done so that those with good practices are allowed to operate. Then the rotten tomatoes can be identified can talked to and action taken against them,” he said.

This comes after the State Minister for Finance Haruna Kasolo instructed the Uganda Microfinance Regulatory Authority-UMRA to stop issuing operating licenses to online money lenders until the government establishes a mechanism to regulate them.

Kasolo said that the government is considering amendments to the tier-four Microfinance Institutions and Money Lender’s Act to solve such challenges.

UMRA Executive Director Edith Tusuubira says that regulation of online or digital lenders remains complicated because many of them are operating illegally and charging exorbitant rates from desperate borrowers. She, however, cautioned Ugandans against dealing with anonymous lenders.

But Kavuya says that money lenders are a crucial part of the economy since they cater to up to 52 per cent of Ugandans who cannot access credit from other institutions due to various reasons.

According to Kavuya, there is a stereotype about money lending businesses where there is a Bundling of every participant in the sector those who are operating legally and the illegal one. There is a need to differentiate between the two categories if the problems in the sector are to end.