By Mulengera Reporters
Lately, Ugandans, including the President, have been up in arms against anomalous practices that some of the unscrupulous money lenders engage themselves in and in the process make life harder for Ugandans, as opposed to being an opportunity or platform to make life easier for especially businesses or borrowers operating in the informal sector space.
But determined to make themselves understood, money lenders, uniting under Association of Money Lenders in Uganda, have come out to clarify making it clear that, even when there are areas in their operations that require improvement, their business isn’t entirely evil as has sometimes been portrayed or depicted. Their clarification is reproduced, verbatim, hereunder:
FULL VERBATIM:
The Association of Money Lenders in Uganda brings together legitimate and ethical money lenders with the objective of safeguarding Uganda’s financial systems through ethical credit services to borrowers.
The Association of Money Lenders in Uganda (AMLU) plays a crucial role in lubricating the gears of Uganda’s economy, particularly in sectors where traditional banking services may be limited or inaccessible.
Our members serve as a vital lifeline for small businesses, market vendors and entrepreneurs who rely on short-term loans to purchase inventory, bridge cash flow gaps or seize time-sensitive business opportunities.
The Uganda Microfinance Regulatory Authority (UMRA) reported that by September 2023; 1,302 licensed money lenders had extended loans to about 2.5m customers, with an outstanding portfolio of Shs1.2trn. This substantial figure underscores our sector’s significant contribution to economic activity. Money lenders often provide the necessary capital for farmers to buy seeds and fertilizers, for shopkeepers to stock their shelves and for transport operators to maintain their vehicles – all essential activities that keep the wheels of commerce turning.
Moreover, by offering financial services to those who might otherwise be excluded from the formal banking sector, AMLU members contribute to financial inclusion, which is a key driver of economic growth and poverty reduction. Our ability to process loans quickly and with flexible terms means that we can respond rapidly to the dynamic needs of Uganda’s vibrant informal sector, which forms the backbone of our economy.
We acknowledge the recent public interest in money lending services. President Yoweri Kaguta Museveni has recently raised concerns about exploitative money-lenders, which we agree with. We appreciate the President’s concern for the financial well-being of Ugandan citizens and we are ready to provide solutions.
As an association, we recognize that there are individuals within our sector whose practices may not align with the highest standards of ethical lending. We are actively addressing these concerns internally and are committed to improving the overall integrity of our industry, working with all stakeholders. The Uganda Microfinance Regulatory Authority (UMRA) is mandated to regulate and supervise the money lending business in Uganda.
Therefore, to build stability and integrity within our sub-sector, we propose the following:
- We will strengthen our working relationship with UMRA to jointly address the issue of unlicensed operators in the money lending business. This collaboration will identify non-compliant actors and reinforce the legitimacy of licensed money lenders;
- We will hold regular engagement sessions with UMRA, focusing on enforcing minimum ethical standards in the sub-sector through peer mechanisms;
- We will offer UMRA our platforms for skills development and awareness programs to promote good lending practices across the sub-sector.
- We will work with all stakeholders to raise public awareness about the proper conduct of the money lending businesses. These sessions will educate both lenders and borrowers, fostering a more informed and responsible financial ecosystem.
“We are committed to fostering a responsible and ethical money lending environment in Uganda. Our goal is to work closely with regulators and stakeholders to ensure that our services continue to support economic growth while protecting the interests of borrowers,” says Mr. Jonan Akandwanaho, newly-elected Chair of the Association of Money Lenders in Uganda.
“The money lending sector has been instrumental in providing financial access to millions of Ugandans over the years. As we move forward, we remain dedicated to our mission of financial inclusion while continuously improving our practices to meet the evolving needs of our nation,” clarifies Mr. Ben Kavuya, founding Chairperson and Member of the Advisory Council.
The Association of Money Lenders in Uganda believes that through constructive dialogue and cooperation with regulatory bodies and the government, we can address all concerns, improve industry standards and continue to serve Ugandans responsibly to safeguard the country’s financial future. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at [email protected]).