Overview:
In his State-of-the-Nation Address (SONA) on Thursday, Mr Museveni wondered why moneylenders charge 36 percent and more when the country’s inflation rate is only 3 percent.
President Museveni has revealed that he has directed the Attorney General to guide the Minister of Finance on criminalising the practice of moneylenders and commercial banks charging exorbitant interest rates.
In his State-of-the-Nation Address (SONA) on Thursday, Mr Museveni wondered why moneylenders charge 36 percent and more when the country’s inflation rate is only 3 percent.
“The inflation rate in Uganda is 3 percent; why should the commercial banks charge 20 percent interest? How about the moneylenders charging 36 percent or more? This is pure extortion,” he said.
He encouraged the people to borrow from the Parish Development Model (PDM) and Emyooga funds, which attract 12 percent interest rate, or less after 24 months.
The President’s comments follow growing concerns from the public over the high interest rates charged by some moneylenders and microfinance institutions, who entice Ugandans into borrowing with the aim of grabbing the property, which is collateral security attached to the loans when they fail to pay back.
On January 30, the government suspended the issuing of licences to digital/online moneylenders until the Ministry of Finance Planning and Economic Development was fully furnished with information on how they are regulated.
Mr Haruna Kyeyune Kasolo, the State minister for Microfinance, issued a directive to the Uganda Microfinance Regulatory Authority, which regulates moneylenders.
“These online moneylenders are untraceable and this has given them the leeway to steal from Ugandans,” Mr Kasolo said.