Money lenders association vows to clean up industry after Museveni directive

The Association of Money Lenders in Uganda (AMLU) has reaffirmed its commitment to eliminating unlicensed money lenders, following President Yoweri Kaguta Museveni’s recent directive. This move aims to enhance the integrity of Uganda’s financial system.

AMLU brings together legitimate and ethical money lenders, providing essential financial services to sectors where traditional banking may be limited or inaccessible.

According to the Uganda Microfinance Regulatory Authority (UMRA), by September 2023, 1,302 licensed money lenders had extended loans to approximately 2.5 million customers, with an outstanding portfolio of UGX 1.2 Trillion. This significant figure underscores the sector’s substantial contribution to economic activity.

Money lenders provide crucial capital for farmers to purchase seeds and fertilizers, shopkeepers to stock their shelves, and transport operators to maintain their vehicles. By offering financial services to those who might otherwise be excluded from the formal banking sector, AMLU members promote financial inclusion, driving economic growth and poverty reduction.

The association acknowledges public concerns about exploitative money lenders and is actively addressing these issues. President Museveni’s concerns for the financial well-being of Ugandan citizens are shared by AMLU.

“We understand the concerns surrounding exploitative lending practices and are committed to eradicating them,” said Jonan Akandwanaho, AMLU Chair. “Our goal is to work closely with regulators and stakeholders to ensure our services continue to support economic growth while protecting borrowers’ interests.”

To address these concerns, AMLU proposes strengthening its working relationship with UMRA. This collaboration will identify non-compliant actors and reinforce the legitimacy of licensed money lenders.

Regular engagement sessions with UMRA will focus on enforcing minimum ethical standards. AMLU will also offer its platforms for skills development and awareness programs to promote good lending practices.

“The money lending sector has a critical role in providing financial access to millions of Ugandans,” said Ben Kavuya, founding Chairperson and Member of the Advisory Council. “We are dedicated to improving our practices, enforcing ethical standards, and ensuring our members operate responsibly.”

Through constructive dialogue and cooperation with regulatory bodies and the government, AMLU believes it can address concerns, improve industry standards, and continue to serve Ugandans responsibly, safeguarding the country’s financial future.