President Museveni, who has been in power for several decades, expressed his concerns about the high interest rates charged by moneylenders in Uganda. He questioned why these lenders charge as much as 20 percent interest per month, which he believes is causing financial distress among young people, even leading to suicides.
During a recent meeting at Entebbe State House, President Museveni directed the Minister of Finance to create a statutory instrument within two weeks to regulate the interest rates imposed by moneylenders. He emphasized that the National Resistance Movement (NRM) would support regulations based on inflation rates.
The President’s remarks come amid rising worries about fraudulent moneylenders and microfinance institutions taking advantage of unsuspecting borrowers by offering loans at exorbitant interest rates and attempting to seize collateral from those who default. The Ugandan Microfinance Regulatory Authority (UMRA) has registered nearly 1,500 moneylenders.
This isn’t the first time President Museveni has raised concerns about high monthly loan charges in Uganda. In a recent retreat at the National Leadership Institute in Kyankwanzi District, he requested the Attorney General to clarify why there is no law regulating lending rates offered by moneylenders.
In July of this year, Speaker of Parliament Anita Among threatened to terminate Memorandums of Understanding (MoUs) between moneylenders and some legislators in the 11th Parliament due to excessively high-interest rates. She cited the harassment of MPs by moneylenders.
According to the Bank of Uganda, lending rates in the country have averaged around 21 percent since the early 1990s. Experts attribute these high rates to the substantial overhead costs faced by financial institutions, making higher interest rates a necessity for lenders.
