Women trapped in web spun by moneylenders

She is neither the first nor last person to run into problems after using a national ID card as collateral. Under the Registration of Persons Act, Section 77, it is an offence if a person, without authority, deprives or dispossess a holder of his or her national identification card or alien’s identification card. Anyone deemed to commit the offence “is liable on conviction to a fine not exceeding 48 currency points or imprisonment not exceeding three years or both.”

One currency point is equivalent to Shs20,000.
Mr Musa Kasajja, the Speaker of Mbale Industrial City Division, says hundreds of women in his area of jurisdiction have found themselves facing the same predicament as Ms Chemutai. 
This, he adds, has threatened the very foundations of the government’s poverty alleviation flagship programme, the Parish Development Model (PDM).

READ: Mobile money agents question Central Bank rule on ID

Don’t take National IDs as collateral - Police

“They get loans and because they cannot pay back, many of them have their national identity cards retained by the money lenders. Other borrowers have had their properties like houses attached,” Mr Kasajja says. He adds: “Many people have missed PDM. People are selling their property cheaply to recover their IDs.”

Growing problem
Last April, police asked moneylenders to disabuse themselves of holding national IDs of borrowers as collateral. It noted that this was rife in districts of Dokolo and Amolatar, and in the Greater Kampala area.

“As you are all aware, national IDs have no economic or monetary value and are supposed to be used exclusively for identification purposes,” a statement the Force issued reads in part.
It adds: “Therefore, any act of confiscation, removing, taking or handing over a national ID as collateral is illegal as it denies the owner the ability to use their national ID for identification while travelling or when conducting other transactions.”

Now the police can add the eastern district of Mbale among those where shylocks are making the most of the vulnerabilities and desperation of borrowers. Mr Steven Masiga, an observer, says women have turned out to be easy targets for the shylocks.
“Many of them have also lost their properties, including household items after failing to service the loans that are charged with high-interest rates,” he says. He adds that loans as low as Shs50,000 have left many in a spot of bother.

Mr Ben Kavuya, the chairperson of the Uganda Moneylenders Association, says state actors should act decisively and ruthlessly in a bid to rein in shylocks who weaponise national ID cards.
“I find it illegal for moneylenders to confiscate borrower’s IDs. The national IDs are not [collateral] security,” he says.
“I think they are not money lenders because real money lenders can’t do that. They are doing illegal things. Money should have a licence,” he adds.

Ms Edith Tusubira, the executive director of Uganda Microfinance Regulatory Authority (UMRA), says they gave a directive asking moneylenders to stop confiscating people’s national ID cards.
“The national identification [card] is for identification, so they should not use it as collateral. The team is already going around discouraging such behaviour. For us the authorities, we are going to continue hunting down everyone going against the law,” Ms Tusubira says.

Gendered impact
The way shylocks continue to go about their business, however, is suggestive of how untouchable they are. At least that is the impression Mr Hakim Balikoowa, a businessman in Mbale, gets. He says there is a group of them who have been terrorising residents.
“This group is untouchable. When they are recovering their money, they move on boda bodas and…arrest and beat [borrowers]. Those who were beaten tried to report to the police, but the response they got was that these people are untouchable. What is more terrible is that these people confiscated national IDs from whoever picked loans from them,” Mr Balikoowa says. 
Mr Balikoowa describes the situation as horrible and asks authorities to intervene.

The National Identification and Registration Authority (Nira) has previously warned moneylenders against withholding national ID cards as collateral, citing violations of cardholders’ rights to access government programmes.
Mr Hussein Kadimba, the Mbale Northern City Division speaker, says many of the individuals engaged in the moneylending business are operating without licences. He adds that the Mbale City authorities have now resolved to force the shylocks to return the ID cards to the owners.

“Even after the borrower has fully serviced the loan, the unscrupulous moneylenders retain their national IDs and keep the borrowers under pressure to take another loan,” Mr Kadimba says.

Mr Yahaya Were, the deputy resident city commissioner (RCC) in charge of the Northern Division in Mbale City, says his office has taken up the matter.
“This matter has now become an issue of security concern. Taking someone’s national ID, which is a government document as security for a loan, is illegal. The city security committee has resolved that the money lenders return people’s national IDs with immediate effect,” he says.

Stand warned
Mr Rogers Taitika, the Elgon Regional Police spokesperson, says: “Such actions not only violate the rights of the ID card owner but also hinder their ability to use the card for identification purposes, such as travelling, participating in government programmes like the PDM, or conducting various transactions.” 
Recently, Osborn Mushabe, the Nira spokesperson, said many shylocks have continued to defy warnings of accepting national ID cards as collateral. 
Mr David Okello, an economist, urges moneylenders to cease the habit of withholding IDs.

“Failure to comply could lead to legal consequences and individuals whose national ID cards were confiscated are encouraged to report the matter to the nearest police station or RDC’s office,” Mr Okello says, pointing to the regulatory guidelines provided by  UMRA.
Already, police detectives, who requested not to be named in order to speak freely, have disclosed that some moneylenders are under investigation.

“The issue of the national identity cards is a big concern that needs to be discussed further at the national level because those who don’t have them are not easily supported as they seek government services,” one detective says.
We have also learnt that the shylocks are forcing their victims to sign sale agreements for the properties they present as security.

Residents narrate ordeal
Recently, Osborn Mushabe, the Nira spokesperson, said many moneylenders have continued to defy warnings of accepting national ID cards as collateral. 

Observers, however, say rather than inundate shylocks with threats, state actors should address push and pull factors propping up the dark business. 
Ms Gloria Nagawa, a resident, says she turned to shylocks after failing to meet stringent bank requirements for a loan of Shs200,000 to recapitalise her food stall.

“I called my friend who connected me to a moneylender and he told me just to give him my national ID as security. I got Shs200,000 in less than 30 minutes, but, shortly, I was told to pay interest of Shs80,000 in a period of two weeks,” Ms Nagawa says.
The government has instead opted to warn the public against borrowing money from unlicensed lenders. 

According to authorities, the unlicensed individuals were conducting moneylending business in total disregard to the provisions of the law. These shylocks have majorly pitched camp in the eastern districts of Mbale, Sironko, Bulambuli, Butaleja, Namutumba, Jinja, Bugiri, Manafwa, Bududa, Tororo, Budaka, among others.
Ms Stella Mutonyi, a businesswoman operating a retail shop, says her national identity card is retained by money lenders.

“I could not register to benefit from the PDM programme, which is supposed to help the poor get out of poverty,” she says.