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Uganda’s president, Yoweri Museveni, upon learning of the standard practices of lenders in his country, seemed appalled and has moved to effect an immediate change.
The president on Thursday noted that he had instructed the country’s finance minister to ensure a statutory instrument on the interest rate of lenders, within the next 2 weeks. He was shocked to discover that money lenders in his country were latching as much as 20% interest on loans, leading to higher rates of suicide amongst young people in the country who find themselves in inescapable debt traps.
“While chairing the NRM Caucus at Entebbe State House this afternoon (September 28th), I directed the Minister of Finance to put out a statutory instrument within two weeks on the interest paid to money lenders in accordance with the inflation which the NRM will support. These money lenders who are causing suicide to our young people who allow them to operate? Why should someone charge 20% interest on a loan per month? This must stop,” President Museveni expressed via X, formerly Twitter.
Museveni’s concerns come amidst a conspiracy that money lenders rope young people into procuring loans that rapidly accumulate interest and eventually become un-payable. This scheme is intended to create predicaments where people unable to pay their debts are made to forfeit their collaterals, which are often times more valuable than the loans.
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This is hardly the first time the Ugandan president has made mention of this issue. He had also recently pointed it out during a retreat at the National Leadership Institute in Kyankwanzi district, where he asked the attorney general why there were no regulations controlling the rates lenders offer.
Anita Among, the Speaker of Parliament, back in July also threatened to abolish all Memorandums of Understanding several money lenders enjoyed with a section of legislation in the 11th Parliament.
She noted that the move was to regulate lenders who have developed a habit of harassing some of the country’s parliamentary members. “And money lenders who are harassing MPs with very high interest rates, even if it's just one day overdue, I am going to cancel those MoUs, because the easiest way to get their money is from Parliament,” the speaker said.
According to the Bank of Uganda, since the 90s, interest rates have averaged 21%. What primarily drives these rates is the consequential overhead expenditures confronting financial institutions. To combat these costs, experts argue that lenders must spike interest rates.