Borrowers are reportedly charged interest rates ranging between 12 and 15 percent per month
Dozens of residents in various cells of Masaka City are reportedly staying away from their homes to evade arrest or the seizure of their properties by moneylenders who issue high-interest loans.
The situation is said to be most prevalent in wards recently added to the city following its expansion beyond the former Masaka Municipality boundaries.
Mathias Ddumba, the Chairperson of Katwadde Ward in Nyendo-Mukungwe Division, says the area has recently seen an influx of informal moneylenders operating directly within communities.
He notes that many residents have fallen victim after being persuaded to take high-interest loans from these lenders.
According to him, borrowers are charged interest rates ranging between 12 and 15 percent per month and are required to deposit land sale agreements, motor vehicles, or houses as collateral.
Ddumba says many borrowers have since failed to repay the loans due to the high interest rates, leading to confiscation of their properties, while others are currently on the run.
He adds that some moneylenders are deliberately targeting residents with undeveloped land, which is later subdivided into plots and resold after confiscation.
Jumah Mawejje, the Chairperson of Kasanje Ward, says some moneylenders are allegedly collaborating with local council leaders who sign as witnesses on sales agreements, effectively validating the transactions.
According to Mawejje, some local leaders have also become agents of moneylenders operating in their areas, a situation he says has allowed informal lending practices to thrive.
Denis Kiweewa, the LCI Chairperson for Samaliya Cell in Nyendo-Mukungwe Division, argues that unless the government improves the remuneration of lower local council leaders, some may continue engaging in inappropriate ways of raising additional income.
He acknowledges that, in addition to abetting loan sharks, some local council leaders have turned into property brokers who also witness questionable sales agreements, practices he says are fueling conflict in the community.
Meanwhile, Mariam Kaberuka, the Masaka Deputy Resident City Commissioner in charge of Nyendo-Mukungwe Division, says her office is investigating the matter after receiving reports from victims whose properties were allegedly confiscated irregularly.
She says ward administrators have been instructed to document all non-bank moneylenders operating in their areas to guide security agencies in addressing the problem.
Kaberuka has also cautioned residents against borrowing from informal moneylenders, urging them to use government-supported savings and credit cooperative organisations (SACCOs), which offer lower interest rates.
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