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UMRA Cracks Down On Unlicensed Moneylenders

The Uganda Microfinance Regulatory Authority (UMRA) has given a two-week ultimatum to unlicensed moneylenders in the Bunyoro sub-region to regularize their businesses following allegations of fraudulent activities. The move comes after numerous complaints were raised by members of the public in the area against some moneylenders who have been accused of acting as con men while executing their duties.

A team of officials from the Uganda Microfinance Regulatory Authority, the regulators of Tier 4 Microfinance, and moneylenders camped in the region to investigate the complaints. Among the issues raised against the moneylenders are the grabbing of properties, homes, houses, motorcycles, and national identity cards. Residents and leaders in the region have complained about the proliferation of unlicensed moneylenders and called on the government to take action.

The regulator has therefore deployed a team of officers to follow up on these complaints and take necessary action. UMRA Communications Manager, Edward Bindhe, says they carried out surveillance and registered numerous complaints in the area.

The team found more than twelve moneylenders operating without a license from UMRA, including Kimojo Services Limited, Nkama Business Investments Limited, Amwitash Investment, Sseraka General Traders, Simon Muta James, F.R Investments Limited, ECCKO Prime Loans, and MZK Financial Services, among others, in the districts of Hoima, Kibaale, Kagadi, Kakumiro, and Kikuube.

“We found these companies lending money without a license from the Uganda Microfinance Regulatory Authority, which is against the Tier 4 Microfinance Institutions and Moneylenders Act, 2016. We also found them with hundreds of original national identity cards, which is against Regulation 18 of the Tier 4 Microfinance Institutions and Moneylenders Regulations 2018,” said Bindhe.

Bindhe added that they have issued letters to all illegal moneylenders, giving them 14 days to legalize their businesses. He also said they have requested those with national identity cards to return them to their borrowers so that when they follow up after the expiry of the 14-day ultimatum, all the national IDs will have been returned to their owners.

UMRA Compliance Officer, Benon Mugambe, noted that some moneylenders are signing sales agreements with some borrowers before advancing loans, which is against the requirements. He emphasized that moneylenders must sign loan agreements when entering into a loan transaction and share them with the borrowers. Mugambe also said that borrowers must be given repayment schedules and key fact documents, which some moneylenders were not doing.

Mugambe urged borrowers to transact only with licensed moneylenders. William Kasigazi Donanto, the Resident City Commissioner for Hoima East Division, said thousands of original national identity cards are in the hands of moneylenders. Kasigazi added that the Ministry of Education and Sports recently rolled out an exercise to register learners at all levels under the Education Management Information System (EMIS), but several parents could not do it because they did not have their IDs, which had been confiscated by moneylenders.

Oliver Kanyunyuzi, one of the victims, called on the government to come to their rescue and normalize the situation. Johnbosco Tugume, a resident of Kikuube, said the government needs to clearly regulate the operations of moneylenders since most of them are operating illegally.Robert Ruhigwa, the LCIII Chairperson of Hoima West Division, urged the government to investigate the matter thoroughly since many people have fallen victim. Benson Chiche, the Hoima LCV Vice Chairperson, said that several complaints have been raised by the public, but the government has not taken much action to address them.

URN

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