The Democratic Party (DP) has applauded the Minister of Finance, Matia Kasaija, for ordering all money lenders not to charge above 2.8% per month and 33.6% per annum.
While addressing the media at the party offices on Balintuma Road on Tuesday, November 19, 2024, Fred Mwesigwa, the DP presidential press secretary, said that as a party they welcome the move and this has been long overdue.
“As DP we welcome this step by the Ministry of Finance because the issue of money lenders charging exorbitant interest rates has been here for a long time, and we appreciate the government for coming in to regulate,” he said.
Mwesigwa asked the government to sensitize the masses about the Tier 4 Microfinance Institutions and Money Lenders Act and, if possible, translate it into local languages.
“Let the Act be translated into local languages so that people can easily understand it, and let people be sensitized about it so that they don’t continue falling victim to the money lender schemes,” he added.
Lyne Nyangoma, a money lender in Wandegeya, said that it’s a good directive; however, people are always desperate for money, adding that even when they don’t intend to attach their collateral security, the customers force them to sell their collateral to recover their money.
“Many times a client comes with an urgent need for cash regardless of the interest rate; time comes for paying, and they can’t pay back, and in most cases you find the collateral security is even not enough to cover the principle borrowed. We always want our money back, and you are left with no option but to sell the collateral just to recover your money, and sometimes we also make losses to bad debtors,” she said.
Read Also: Money Lenders Directed to Charge Customers 2.8% Monthly Interest Rate
From the legal gazette of November 15, 2024, the ministry of finance passed an act to regulate the interest rate of borrowers.
The directive is in accordance with section 89(1) of the Tier 4 Microfinance Institutions and Money Lenders Act, which states that the maximum interest rate that a money lender shall charge on the principal or the actual sum of money advanced as a loan to a borrower is two point eight percent (2.8%) per month or thirty-three point six percent (33.6) per annum.
