The government has expressed concern over the rate at which some fraudulent money lenders and microfinance institutions are reportedly hoodwinking unsuspecting Ugandans into borrowing at exorbitant interest rates, with a target of snatching the collateral security of defaulters.
UMRA is a government agency responsible for licensing, supervision and regulation of Tier 4 microfinance institutions, money lenders and savings and cooperatives, among others.
Addressing participants at a stakeholders training organised by UMRA on Thursday, Ms Muhwezi revealed that they “have handled several cases of borrowers whose property has been taken by the money lenders and “we have helped in the process of redeeming them back to the owners.”
She added: “As a regulator, we have a complaint-handling mechanism—the consumer protection bureau. Every time a complaint is raised, we investigate the matter.”
Ms Muhwezi said it is illegal for any money lender to attach, confiscate or sell off the property of borrowers without following the law.
“The law is very clear that within 60 days after issuing demand notice of one, two, three—in a proper delinquency management—that is when you can enforce on property that was offered,” she said, adding, “The borrower has a right to seek someone who can purchase his property at a price higher than what they are meant to pay, instead of a money lender taking it over or selling it cheaply.”
Ms Muhwezi also cautioned money lenders and microfinance institutions in the habit of charging “exorbitant interest rates”.
Close to 1,500 money lenders have been registered by UMRA.
Mr John Sunday, the chairperson of Rebahare Investments Limited, a money-lending business, admitted that a number of lenders have not covered themselves in glory. Some of them, he revealed, disappear “until the payback period expires, and [they] take away the collateral.”