Government caps moneylenders interest rate at 2.8%

A legal notice issued under the Tier 4 Microfinance Institutions and Money Lenders Act, Cap. 61, has capped the maximum interest rate that moneylenders can charge at 33.6% annually.

The notice also dictates that the "maximum interest rate that a money lender shall charge on the principle or the actual sum of the money advanced as a loan to a borrower is 2.8% per month."

Deputy Speaker Tayebwa Targeted by Moneylender

The Deputy Speaker of Parliament, Thomas Tayebwa, recently revealed an alarming encounter with an agent from an online moneylending platform, Mangu Cash.

According to Tayebwa, he received a threatening call demanding he pay for a loan taken out by an individual who had listed him as a next of kin.

The caller allegedly warned that failure to comply would result in deductions directly from his account.

Deputy Speaker Thomas Tayebwa pulse uganda

Tayebwa condemned the incident, describing it as criminal, and called for stricter regulation of online moneylenders.

Responding to his concerns, Assistant Inspector General of Police Tom Magambo confirmed that investigations into the alleged malpractice are underway.

Tayebwa’s experience has brought renewed attention to the dangers posed by unregulated digital lenders, who often harass clients and misuse personal data.

President Museveni’s Push for Reform

President Yoweri Museveni has also expressed his dissatisfaction with exploitative moneylending practices. During a recent event, Museveni labelled such lenders as “criminals” and vowed to eradicate their operations.

He criticised their exorbitant interest rates and exploitative contracts that often leave borrowers losing valuable assets for far less than their worth.

Museveni urged Ugandans to rely on government-backed initiatives such as the Uganda Development Bank (UDB), Emyooga, and the Parish Development Model (PDM) for affordable loans.

President Yoweri Museveni pulse uganda

The President’s comments underscore his administration’s commitment to fostering economic growth by protecting borrowers and promoting industrialisation and agricultural development.

Museveni reiterated the importance of prioritising affordable capital for productive sectors, such as manufacturing and agriculture, while discouraging borrowing for luxury or non-essential items.

A Step Towards Consumer Protection

By capping interest rates at 33.6% per annum, the government aims to protect borrowers from exorbitant charges.

The Uganda Microfinance Regulatory Authority (UMRA) has also been working to introduce additional guidelines to regulate the sector and safeguard consumer rights.