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Borrowers Ignore Money Lenders Act

Matia Mulindwa Kagugube, a money lender trading under Top-up Financial Services in Masaka town, has noted centralized process of licensing in holding many them back from formalizing their operations urging the process is brought closer to them.

Audio 3

Hundreds of borrowers have continued to ignore government's caution against dealing with unlicensed money lenders .

In March the government brought into force the Tier Four Microfinance Institutions and Money Lenders Act 2018, as a new regulatory framework for all non-deposit taking financial institutions that lend out credit.

The new law puts in place standards that protect borrowers from being cheated through exorbitant interest rates and unfair loan agreements.

Despite the presence of the new law, hundreds of people are still obtaining loans from unlicensed money lenders. 

In Kyotera and Masaka districts, some of the borrowers feign ignorance about the new law and its contents. 

Juliet Namatovu, a saloon operator in Kaliizo Town Council, Kyotera district says that the new law has not taken effect in the area. She explains that she recently obtained a 500,000 shillings loan from a local mobile money lender at a monthly interest of 15%. 

Namatovu adds that many people are highly ignorant about the new law despite acknowledging the challenges of being exploited and cheated by the money lenders. 

The new law also requires all money lenders; on top of a valid license to have physical addresses, for purposes of simplifying their impromptu supervision by the Uganda Microfinance Regulatory Authority-UMRA, a body that is mandated to oversee their operations.

Mathias Kisekulo, the Kyotera district Financial Officer confirms that many unlicensed and unregistered money lenders are still operating in the area.

He, however, adds that his office has already forwarded to UMRA complaints of people defrauded by money lenders for investigations. 

//Cue in: “because sincerely speaking…..

Cue out: ….big chunks of money.”//

Matia Mulindwa Kagugube, a money lender trading under Top-up Financial Services in Masaka town, notes that the centralized process of licensing is holding them from registration.

//Cue in; “for registration purposes….

Cue out; ….. as they pay.”//

Luganda

//Cue in: “ekintu baki bakitadde…..

Cue out: …. Liba limukwata,”//