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Minister Dr. Chris Baryomunsi has called on all moneylenders in Uganda to register and obtain licenses, warning that those operating illegally will face legal action. He noted widespread exploitation of vulnerable borrowers and revealed that the government is considering a cap on interest rates to curb predatory lending practices.

The Government has issued a warning to all individuals engaged in moneylending activities, emphasizing the importance of registering and obtaining the necessary licenses to avoid potential legal repercussions.

Information Minister Dr. Chris Baryomunsi stated that despite existing regulations, numerous moneylenders are operating unlawfully, exploiting and extorting vulnerable Ugandans. He highlighted that many of these operators are situated in rural areas, where financial literacy is often insufficient.

Dr. Baryomunsi noted that these operators frequently take advantage of individuals in desperate circumstances, coercing them into signing documents and transferring property titles, ultimately leading to the sale of their assets without their full comprehension. Many victims, he explained, only realize the extent of their predicament when confronted with the obligation to repay the loan along with accrued interest.

The Minister further indicated that some registered and licensed moneylenders also engage in similar exploitative practices by imposing exorbitant interest rates, which borrowers often struggle to repay, resulting in the loss of their property.

During a media briefing at the Uganda Media Centre in Kampala, Dr. Baryomunsi emphasized that a Cabinet meeting held on September 23, 2024, and chaired by President Yoweri Museveni at State House Entebbe, resolved to revisit the legislation governing moneylenders to enhance the regulatory framework. Key areas of focus include the interest rates charged by moneylenders and the requirement for all operators to be fully registered and licensed.

“We wish to caution those operating outside the law and exploiting Ugandans to comply with legal requirements, as the law will ultimately catch up with you,” he stated.

Dr. Baryomunsi elaborated that the Government is contemplating the implementation of a cap on interest rates charged by moneylenders, which are currently unregulated. “The Cabinet has guided that interest rates must be calculated based on the annual inflation rate in the country, allowing moneylenders to maintain profitability without adversely affecting borrowers,” he added.

He noted that certain moneylending companies impose interest rates that can reach 20% per month on borrowed funds or even higher. “While Uganda operates within a liberalized economy, the Government cannot remain passive while the population is subjected to severe impoverishment due to predatory moneylending practices,” he asserted.