Bugisu women choking on loans from illegal money lenders

MBALE- There is a growing concern as some businesswomen in Bugisu Sub-region choke on small loans given by unlicensed money lenders.

The unlicensed moneylenders nicknamed ‘Team No Sleep’ have caused havoc in the Sub-region where residents find it hard to get cheap loans.

The illegal money lending entities are taking advantage of desperate businesswomen who were affected by Covid-19 pandemic.

Money lenders in the country are regulated Uganda Microfinance Regulatory Authority [UMRA] established by the Tier IV Microfinance Institutions and Money lenders Act, 2016.

Recently, government through UMRA warned the public against dealing with unlicensed money lenders who conduct business outside the provisions of the law.

This reporter has established different unlicensed money lenders have pitched camps in the Bugisu Sub-region districts of Bududa, Sironko, Manafwa, Mbale, Namisindwa, and Bulambuli with the aim of offering personal and small business loans to unsuspecting borrowers.

While many of the unsuspecting women seek loans to improve their livelihoods, the loans have instead impoverished the borrowers. This is because of the high interest rate of 20 percent, yet loan servicing begins on the same day one takes the loan, with borrowers required to remit Shs 10,000 daily till the loan with its interest on top is paid.

“These groups started in our area during the Covid-19 period, they target poor people,” Jennifer Kakayi, a resident of Namunsi in Mbale City said.

She notes that many women in the area now play seek and hide games with the money lenders because they have defaulted on their loans.

To qualify for a loan, one must surrender his or her national identity card as collateral and have a guarantor who also has to deposit his national identity card with the money lenders.

Hajjati kakaire, the chairperson of Nakaloke 3 Zone in Mbale Northern City Division says, “Many people have deposited their identity cards with the moneylenders. Out of every 50 women, you will find only 20 in possession of their national identity cards.

She says the moneylenders have made it impossible for the local people to develop themselves because of the high interest rate and the short period of time given to pay back the money.

Some residents claim that loans from money lenders have made many of the beneficiaries poorer. This reporter understands that many borrowers who have failed to service their loans have instead fled their homes in fear of being arrested.

The LCI chairperson of Afia Ward in Northern City Division says many of her residents leave their homes very early and return late in the night.

“If you move around right now, you will find that many doors are locked. It is not that the owners have gone to work, no. They wake up early in the morning and return late at night. They fear being arrested by the money lenders,” she said.

Hadija Nambafu, the female councilor representing Afia Ward in Northern City Division, says the moneylenders have exacerbated levels of family neglect as many women abandon their homes and children.

According to her, the moneylenders have established offices in trading centers within districts in Bugisu Sub-region. Adding, “As local leaders, they have never been briefed by security on the operations of the money lenders.

The moneylenders come in an area and they rent a double-roomed house. They use the front room as their office and sleep in the behind room. What is surprising about them is that these money lenders seem to come from one part of the country.

Nambafu wants the government to speed up the process of disbursing the Parish Development Model [PDM] funds to save the locals from the extortionists.

“If people start accessing these PDM funds, then the moneylenders will have no one to lend to and in the end, they will lose business and be forced to quit the areas in which they operate,” she notes.

Michael Malomo, the former Mbale City principal commercial officer who is now the principal accountant at the Northern City Division headquarters, says the money lenders in Mbale town are operating illegally as they have never been licensed by the city authorities and that they don’t pay taxes.

“Regarding the issue of the mushrooming business of money lending around town and other parts of the region, we have never as a city authority received any application on their operations. We don’t know them and they have never paid taxes. If anyone at the divisions is taxing them, then he or she is doing it illegally.”

He added that the mysterious moneylenders are under investigation. “In fact, what I can tell you is that they are under investigation,” he said, condemning the confiscation of the borrowers’ national identification cards as illegal.
https://thecooperator.news/umra-ursb-summon-money-lenders-for-crucial-meeting-in-kampala/

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