Money lenders ripping us off, residents cry out

Mr Andrew Kityo, a resident of Kimaanya ‘B’ Village in Kimaanya-Kabonera Municipality, Masaka City, says in May, he lost his plot of land after five months that a money lender had given him to repay Shs5m elapsed.
Mr Kityo says moneylenders tend to flee unsuspecting clients of their properties without going through formal scrutiny like commercial banks.
“It is hard to report to police because they usually trick people to sign agreements that they have sold off the properties yet they just borrowed money,’’ he says.
Mr Kityo adds that money lenders have caused more harm than good because they also ask for higher interest compared to commercial banks.
He is among many Ugandans who are increasingly losing their property, including land and other valuable assets, according to testimonies given by several victims countrywide.
In Kabale District, for example, the Resident District Commissioner (RDC), Mr Godfrey Nyakahuma, says he registers about 10 cases weekly from locals and some civil servants.
“Other money lenders retain the academic documents of civil servants before offering credit to them,” he  says.
He adds that several complaints show that even after paying the principal sum borrowed plus the interest accrued, the money lenders continue to sell the mortgaged properties, especially land, leaving the majority of the complainants homeless.
“The situation is too complex for us to arrest the fraudulent culprits since many of the aggrieved community members do not want their names to be mentioned for fear of exposing their ignorance in public,’’ the RDC says.
Mr Nyakahuma’s counterpart from Kisoro District, Hajji Shafiq Ssekandi,  says the issue of fraudulent money lenders was tabled before the District Security Committee in April for thorough investigations, but they are yet to commence investigations.
“My message on radio talk shows is that those in need of a loan should use the services of established commercial banks, village and sub-county Saccos, government programmes, including Emyooga, Parish Development Model, and Uganda Women Entrepreneurship Programme among others, but not dealing with fraudulent people,” Mr Ssekandi says.
In Ankore Sub-region, unscrupulous groups of moneylenders that have taken over people’s property are known as ‘Kafuna’ people. These reportedly own large chunks of land, shopping malls, and arcades.
The victims say they have a well-coordinated network encompassing local leaders, security, and courts.
“Most of the people who go to these moneylenders urgently need money for paying medical bills, and school fees. Money lenders cheat clients by turning a mortgage agreement into a sale agreement. When it is also time to repay them, they switch off their phones, become elusive and return the next day to claim your property,”  Mr Sam Rwambuka, a victim, says.
Mr Rwambuka, a resident of Rwenshanku in Bubaare, Mbarara City, further explains that he got a loan of Shs5m from a money lender in May 2019 and was expected to repay Shs6m after one month, but after the loan period, the borrower reportedly became elusive. 
“After one month, I looked for him at his shop in Mbarara Town, contacted friends, and tried calling him in vain. He only resurfaced after three days, claiming the plot I had given him as security. I unsuccessfully tried working with authorities to secure my plot. I gave up and it [plot] was taken,” he says.
Mbarara
Ms Alice Bebuze, a resident of Rwobuyenye Cell, Kakiika, Mbarara City North, who is also a victim, says his LC1 introduced him to a money lender after he lost a sister last year and her body was stranded in Kampala.
“I wanted Shs10m and was expected to repay Shs12m after two months. The LC1 assured me that there would be no problem if I paid on time because he was a witness. I agreed and was given the money.
“However, after two months, I failed to trace the money lender even through the LC1 who had earlier convinced me that everything would be right. I later found people fencing off my land,” Ms Bebuze says.
The money lender later resurfaced and reportedly told Ms Bebuze that it was no longer her land because she had defaulted.
In Jinja City, Mr Bakali Balita, a resident of Bugembe Ward in Southern Division, said a money lender allegedly confiscated his car logbook after he reportedly failed to repay a loan.
“I was getting several loans ranging from between Shs500,000 and Shs1m, which I cleared; the last loan was about Shs800,000. One day, he called saying the money had accumulated; but when I asked him to explain and by how much, he refused. I asked for the receipts of the money I had been paying, he refused [to give them to me],’’ Mr Balita says.
He adds that he later received court summons, and while the Bugembe Grade One Magistrate ruled that he has to pay Shs5m because the interest had accumulated, he appealed at the High Court and the case is ongoing.
In Lango Sub-region, many people have lost properties to money lenders.  Mr Jacob Ogwal, a businessman in Apac Municipality, is currently in court trying to recover his building taken by a money lender.
Mr Ogwal’s woes started when he borrowed a Shs3m bank loan in 2017, failed to repay and sought the help of a money lender.
“This money lender paid my loan of Shs3m but later he claimed to have given me Shs20m and he used some police officers to evict me from my house. I took him to court and the case is still going on,” he said.
In Arua City, Ms Loyce Adiru, a resident of Nsambia South, recounted how she was treated after borrowing a loan that left her household items confiscated. 
She wants the government to come up with stringent laws to restrain microfinance institutions and money lenders because they act “inhumanely”.
“I cannot forget when they confiscated my items which were only returned after I engaged a lawyer,” she said.
Similarly, Ms Sauda Ajio of Oli ‘B’ Cell in Central Division, said: “The money lenders are fleecing the poor because they over charge them. Imagine someone accumulating penalties each day that you didn’t pay? It is abnormal. We need them to be regulated.”
Due to the increasing population and boom in business, several money lenders have opened up their lending institutions to attract customers.
The law
A law to control money lending in Uganda, the Tier 4 Microfinance Institutions and Moneylenders Act (2016), took effect on July 1, 2017, to put an end to ‘briefcase money lenders’.
The law also regulates Saccos. 
The Bank of Uganda has been regulating Microfinance Deposit-taking Institutions (MDIs), with a minimum capital of Shs500m, but money lenders lacked such a regulation.
However, Mr Andrew James Nyakoojo, the technical adviser in the financial services department in the Finance Ministry, told Daily Monitor in an earlier interview that the law aims at regulating money lending businesses.
He says people have been losing money, and because no one was looking at institutions lending credit below Shs500m, the law is going to check such funds.
The Act also provides for an independent regulator – the Uganda Microfinance Regulatory Authority (UMRA), aimed at overseeing the money lending business in the country.
In the event that a borrower wishes to repay a loan and the moneylender is evasive, the borrower can deposit the loan with UMRA, which will then transmit the money to the moneylender.
Compiled by Philip Wafula, Santo Ojok, George Muron, Felix Warom Okello, Rajab Mukombozi, Robert Muhereza, Naume Biira, Julius Hafasha, Tausi Nakato, Malik Fahad Jingo & Abubaker Kirunda