Minister Matia Kasaija addressing the press recently
HABARI DAILY I Kampala, Uganda I The Uganda Government has heeded the calls of hundreds of citizens who have lost property to shrewd loan sharks and capped the interest rate on loans from the microfinance institutions and money lenders.
The rate has been set at 2.8% per month and 33.6% per annum for the two categories, following the passing of the Tier 4 Microfinance Institutions and Money Lenders Bill 2024.
The recently issued directive by Matia Kasaija, the Finance Minister reflects the government’s intention to alleviate financial burdens on individuals and small businesses that frequently rely on moneylenders for short-term credit.
Kasaija emphasized that the capped rates were part of broader efforts to foster financial inclusion and protect vulnerable borrowers.
This initiative is seen as a step toward building a more transparent and financially inclusive lending environment in Uganda.
Government has tasked the Uganda Microfinance Regulatory Authority (UMRA), with ensuring compliance across the sector.
Lenders failing to adhere to these new rules will face penalties as outlined under the law.
Uganda currency notes
Government’s move to cap lending rates is in tandem with President Yoweri Museveni’s recent condemnation of exploitative lending practices.
Speaking during the 8th Annual Conference of the Southern and Eastern Africa Chief Justices Forum, the president decried the high interest rates imposed by money lenders, questioning the legitimacy of their transactions in which they disguise lending agreements as purchase contracts.
