Unfortunately, there is still no single, fixed maximum interest rate for money lenders in Uganda. Here’s why this situation persists:
- Unenforced Legislation: While the Tier 4 Microfinance Institutions and Money Lenders Act 2016 empowers the Minister of Finance to set a cap on interest rates, this hasn’t been done yet. This leaves a regulatory gap that money lenders can exploit with high rates.
- Ongoing Debate: Stakeholders in Uganda, including the president, continue to debate the appropriate level for an interest rate cap. This debate slows down the process of setting a definitive limit.
- Prioritization of Other Issues: It’s possible that other economic and financial concerns have taken higher priority within the Ugandan government, delaying the process of establishing a maximum interest rate for money lenders.
What this means for borrowers:
- Vulnerability: You remain vulnerable to potentially exorbitant interest rates.
- Need for Caution: It’s even more crucial to research and compare lenders carefully before taking a loan.
- Potential for Exploitation: Without regulation, less scrupulous money lenders could charge extremely high rates.
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