Uganda’s central bank to probe claims mobile money users are paying off strangers’ loans

Kampala, Uganda – Uganda’s central bank says it will investigate allegations that mobile money operators under its supervision have helped digital lenders recover unpaid loans from the wallets of people who say they never agreed to guarantee them.

Bank of Uganda (BOU) Governor Dr Michael Atingi-Ego announced the probe on Monday before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE). The allegations raise questions about consumer protection in a fast-growing market where oversight is split between the central bank and the Ministry of Finance.

“You may recall the last time we interacted here, you raised this issue and I said we were not aware of it. But now that it has come to our information, we are going to investigate that matter and find out to what extent these entities that we supervise are involved in this,” Dr Atingi-Ego told the committee.

“If indeed it is true that the mobile money companies we supervise are involved in this, we will study the facts and take action,” he said.

Mobile phone lending has grown quickly in Uganda. Central bank data for the 12 months to June 2025 show digital loan disbursements rose by 110.8 percent, from 1.66 trillion shillings to 3.5 trillion shillings, nearly $1bn.

The loans run on mobile money platforms that handle large volumes. The value of electronic money transactions rose 28.6 percent to 326.3 trillion shillings in the year to June 2025, according to the BOU. MTN Uganda alone processed 195.5 trillion shillings in mobile money transactions in 2025 and reports 14.7 million active users.

‘B is not aware of the transaction’

Committee chairman Muwadda Nkunyingi, who represents Kyadondo East, said people were losing money after borrowers listed them as guarantors without their knowledge. He alleged that when those borrowers defaulted, lenders recovered the money from the guarantors’ mobile money balances.

“It was raised here that a person A has a transaction with MTN or Airtel. In the process of recovery, these companies [fintechs] recover money from another person called B, whom they allege is a guarantor of A, who has defaulted and whose account has no money. So, they [fintechs] recover the money from B’s mobile money balance, yet B is not aware of the transaction,” Nkunyingi said.

The committee first raised the issue when BOU officials appeared a week earlier. MPs then said some online lenders allegedly used people’s registered phone numbers as guarantors and later demanded repayment from them, and that some victims reportedly had their mobile money transactions blocked or restricted. Lawmakers also asked whether borrowers get the required three days to review loan agreements, whether terms are explained in languages they understand, and whether lenders impose excessive recovery charges.

Andrew Kawere, director of the national payment systems department at the BOU, said the central bank would engage the wallet provider concerned. He added that the outcome would depend on the terms of each loan.

“Bank of Uganda will investigate that issue. But the investigation would be informed by facts, which include the terms under which the borrowing was picked and those terms will then explain the guarantor relationship,” he said.

Kawere also said that, according to the bank’s information, digital loans from BOU-regulated institutions do not require guarantors.

“When it comes to the mobile money lending side, the companies we supervise are specifically MTN and Airtel, which offer digital wallets and work with lenders to extend credit to borrowers,” he said.

The central bank’s officials said its oversight covers wallet providers, payment firms and deposit-taking institutions under the National Payment Systems Act, 2020, but not standalone digital lenders.

That responsibility sits with the finance ministry. In November 2024, Parliament approved a bill returning the Uganda Microfinance Regulatory Authority to the finance ministry, with a new department set to take over its functions. Earlier that year, the regulator had published digital lending guidelines aimed at protecting consumers from predatory lenders.

“Asking Bank of Uganda questions about entities that are not under its supervision, in my view, is not correct,” Dr Atingi-Ego said.

Some MPs were not satisfied. Richard Senteza, who represents Lugazi Municipality, accused the officials of avoiding responsibility for operators the bank licenses.

“If it is your role to put this institution into existence, then it should also be your role to ensure that its continued existence conforms to what you licensed it to do,” Senteza said.

Kawere advised affected people to complain first to their mobile money operators and to escalate unresolved cases to the BOU. Nkunyingi objected that people had already complained without success.

“They [victims] have been raising complaints, but no one has received them because the mobile money operators have no mechanism of even receiving these complaints. Where should this guarantor run?” he said.

Dorothy Masifa Ochola, the central bank’s head of legal, said members of the public could write directly to the BOU. She said the legal department refers each complaint to the relevant department for investigation and responds to every complainant.

Nkunyingi said the committee would take up the matter with the finance ministry’s microfinance regulator, possibly as early as Tuesday.

MTN Uganda and Airtel Uganda did not immediately respond to the allegations.