Moneylenders go to Court over governing law
What you need to know:
They say the Act contravenes the Constitution for providing that the interest in moneylenders contracts shall be expressed in terms of a percentage per year and prohibiting increasing of interest by reason of default under a moneylending contract.
Kampala. Moneylenders have petitioned the Constitutional Court challenging the legality of the Tier 4 Micro Finance Institutions and Money Lenders Act, 2016, saying it is a threat to their business.
In a petition filed on Monday, the moneylenders say the law, which was enacted in 2016, contravenes the Constitution by challenging the National objectives and directives of State Policy.
They contend that Section 78 of the Act that makes it mandatory for a moneylender to be an incorporated company and Section 79 requiring their licences to specify a particular address of carrying out business is inconsistent with the Constitution.
“Section 83 (1) (f) of the Tier 4 Micro Finance Institutions and Money Lenders Act 2016 which creates a blanket criteria for revocation of a moneylenders’ licence on ground that a money lender is conducting business in a manner detrimental to the interests of the public, without specifying the criteria of determining the same is inconsistent with the National Objectives and Directive Principles of State Policy and the Constitution,” reads the petition.
The Moneylenders Association of Uganda Limited jointly with MK Creditors Limited and one of the leaders, Male Mabirizi Kiwanuka filed the petition against the Attorney General.
They are also challenging the legality of Section 84 of the Act that makes it a criminal offence for moneylenders to carry out business in any other place other than the address specified in the license.
They say the Act contravenes the Constitution for providing that the interest in moneylenders contracts shall be expressed in terms of a percentage per year and prohibiting increasing of interest by reason of default under a moneylending contract.
