Kabale RDC Warns of Exploitative Money Lending Practices

Kabale’s Deputy Resident District Commissioner, Michael Muramira Kyakashari, has expressed serious concerns regarding the operations of certain money lenders and microfinance institutions. His office has been inundated with complaints from residents who allege harassment, illegal arrests, and loss of property due to loan agreements.

During a Bank of Uganda Town Hall meeting, Kyakashari highlighted a specific case where a borrower was allegedly told to pay a full year’s interest, even after intending to repay the principal and accrued interest on a Shs2.5 million loan. He also criticized the alleged use of arrests and detentions by some lenders as a means of debt recovery, practices that bypass established legal procedures.

The consequences of these alleged predatory lending tactics are severe, with residents reportedly losing land and other assets. Kyakashari noted that some individuals are even abandoning government poverty-alleviation programs like the Parish Development Model to seek loans from private lenders. Furthermore, a significant number of land disputes currently before the courts in Kabale are linked to these money-lending transactions.

Kyakashari urged all lenders, including SACCOs, to adhere to lawful procedures when recovering loans and to refrain from using extra-legal methods. He emphasized that the volume of loan-related complaints is consuming valuable time that could be better spent on monitoring government programs and service delivery.

In response, Hannington Wasswa from the Bank of Uganda advised residents to only engage with financial institutions that are licensed and supervised by the central bank. He assured the public that regulated institutions provide clear channels for complaints and redress. Wasswa encouraged the public to verify the licensing status of any financial service provider before depositing funds or taking out loans, stressing the importance of exercising caution with entities whose regulatory standing is unclear.

This source article was published by Nile Post.