Ugandans borrowing from money lenders are protected against losing their property since they can pay through the Uganda Microfinance Regulatory Authority (UMRA), once the lender goes into hiding.
UMRA is the regulatory body for microfinance institutions, non-deposit institutions, and money lenders in the country.
Part of their work is to streamline the practices in the sector as well as ensure compliance with the regulations by these players.
Without knowledge of the law, many Ugandans have fallen prey to unscrupulous money lenders, to whom they have ended up losing their property under unclear circumstances.
Most notable is the hiding tactic used by the lender on the payment dates which turns borrowers into defaulters hence losing the collateral property.
“We are mandated to receive money from borrowers under circumstances when the lenders fail to abide by the loan agreement entered between the two parties,” says Edith Namugga Tusuubira the UMRA executive director.
UMRA derives this mandate for the microfinance institutions and money lenders act 2016. However, this option is for loans obtained from licensed money lenders, and short of that, the authority has no solutions.
According to Namugga, it is illegal to secure a loan from any money lenders and sign a sales agreement or transfer forms of the would-be collateral as well as holding a borrower’s national identification documented including driving licenses even ATM cards.
Namugga says that the authority’s main challenge are the Ugandans who opt for non-licensed money lender from whom they enter private understanding which the authority has no control over.
She adds that they have now embarked on a sensitization campaign to equip Ugandans with the knowledge of what is right in the money lending sector.
The regulatory body has been engaging moneylenders on how best they can run their businesses without contradicting the law.
Namugga revealed that most of the “money lenders” are illegally operating since the whole country has less than 1,000 licensed money lenders as of March 2022.
However, some of the money lenders whom URN interacted with expressed concern about the way UMRA is executing its duties, where it is favouring borrowers and deliberately side-lining them as well as questioning its ability to enforce its regulatory mandate.
Flavia Nyakato, says that the regulations are biased because they are siding with the borrowers, adding that by nature of their business they prefer collateral that has a strong attachment with the borrower but the law hinders this, yet the court process is very long.
Mahad Zawadi, says that UMRA has taken find a way of enforcing the regulation on non-compliant money lenders with whom they (licensed) compete with in the market and are tarnishing the name of the business because of their faulty dealings.
“I am wondering why UMRA has failed to get rid of those crooks who are destroying the name of our business yet the law is very clear,” he said.