President Yoweri Museveni has directed the Minister for Finance to expedite the issuance of a statutory instrument within two weeks to regulate the interest rates charged by these institutions.

This directive comes in the wake of growing concerns over the astronomical interest rates, which have reached as high as 20 percent per month, leading to dire consequences, including suicides among young borrowers.

During a meeting at the Entebbe State House, President Museveni expressed his dismay at the unchecked lending rates in the country, questioning who permits these moneylenders to operate with such exorbitant charges, emphasizing the need to align these interest rates with inflation.

This isn’t the first time President Museveni has voiced his concerns about the plight of Ugandans trapped in high-interest loans. Earlier this year, at the National Leadership Institute in Kyankwanzi District, he sought clarity from the Attorney General on the absence of regulations governing moneylenders’ lending rates.

The lack of a legal framework has allowed unscrupulous lenders to exploit vulnerable borrowers.

Uganda Microfinance Regulatory Authority (UMRA) reports that nearly 1,500 money lenders are currently registered, underscoring the proliferation of lending institutions in the country.

However, without effective regulations, borrowers are left exposed to usurious interest rates and the risk of losing their collateral to unscrupulous lenders.

According to the Bank of Uganda, lending rates in the country have averaged a staggering 21 percent since the early 1990s. Experts argue that the primary driver of these high rates is the substantial overhead costs faced by financial institutions, compelling them to charge borrowers excessively to cover their expenses.

As Uganda grapples with this lending crisis, the proposed regulatory measures offer hope for borrowers seeking relief from exorbitant interest rates.