Licensed moneylenders under the Moneylenders Association of Uganda have established a secretariat to advocate for fair policies, and fight loan sharks, whom they say have damaged the reputation of the money lending business.
The association’s president, Jonan Akandwanaho, revealed the development during its third Annual General Meeting in Kampala today. He said the secretariat will act as a central hub for members to access information, services, and support, while promoting professionalism and public awareness about legitimate lenders.
“We have created a secretariat to serve our members’ interests, especially on issues such as licensing, compliance, and accountability,” Akandwanaho said. “For too long, licensed moneylenders have been confused with loan sharks who exploit desperate borrowers and charge unfair interest rates. We want to change that perception and show that we are responsible business people.”
Akandwanaho said one of the biggest challenges licensed moneylenders face is the government’s capping interest rates at 2.8 percent per month. He described the policy as unfair and unrealistic as most moneylenders borrow capital from commercial banks at higher rates and must meet various operational costs.
“Uganda is a free market economy,” he said. “If a hardware shop is free to set its price of cement, why can’t moneylenders also decide how much to charge? We borrow at about 2 percent from banks, so if we lend at 2.8 percent, what remains cannot cover rent, salaries, or other costs. It doesn’t make business sense.”
The association has already taken the matter to court, challenging the government’s interest rate cap. Akandwanaho said the case has been mentioned twice and is awaiting a full hearing. “We have evidence showing that banks and digital lenders charge between 7 and 11 percent per month,” he said. “It is unfair to single out licensed moneylenders who get no support from the government.”
He warned that continued restrictions could push borrowers towards illegal lenders. “If you make it impossible for licensed lenders to operate, people will turn to the black market. That hurts both borrowers and the economy,” he added.
The association’s Secretary General, Medard Muganzi, said the negative image surrounding moneylenders mainly comes from illegal operators who exploit borrowers. He noted that many people do not realize the difference between licensed lenders and unlicensed loan sharks. “There are about 1,500 licensed moneylenders in Uganda according to the regulator,” Muganzi said. “But only 200 are registered with our association. We are reaching out to the rest to join us so that we can speak with one voice and clean up the sector.”
He said the new secretariat will help improve training, standardization, and accountability within the industry. Plans are also underway to develop uniform loan forms and promote best practices among members.
Muganzi emphasized that moneylenders play an important role in promoting financial inclusion, especially for people excluded from the formal banking system. “Over 70 percent of Ugandans are not served by banks,” he said. “When they need quick cash for business or emergencies, they come to moneylenders. That is why we exist to bridge that gap.”
He added that licensed moneylenders often provide faster and more flexible services than banks, especially for small traders who cannot meet strict banking requirements. “When a trader’s goods are stuck at the border, they can’t wait three months for a bank loan. We help them stay in business,” he said.
The association plans to hold regional workshops across Uganda to mobilize more members and train them in corporate governance and financial management. “If we are well-organized, we can attract investors who will fund our sector at lower costs,” Muganzi said.
Edith Tusuubira, former Executive Director of the Uganda Microfinance Regulatory Authority (UMRA), which recently became a department under the Ministry of Finance, Planning, and Economic Development, assured the public that regulation of the moneylending sector is continuing smoothly.“All the work that was being done by UMRA is now under the Ministry of Finance,” she said. “The transition is about 80 percent complete, and the Ministry is fully supporting us. We are continuing to regulate the sector effectively.”
Tusuubira said the new Department of Microfinance Regulation oversees moneylenders, SACCOs, non-deposit-taking microfinance institutions, and savings groups. She added that licensing delays earlier this year were due to changes in the approval process, but all licenses for 2025 have now been approved.
“Nothing has changed in terms of requirements,” she said. “We only took some time to reorganize after UMRA’s closure in March. By June, all licenses were ready. We appreciate the public for their patience and trust.” She urged licensed moneylenders who have not yet collected their licenses to pick them up from the former UMRA offices, which now host the new department.
With the new secretariat in place and the regulator assuring continued oversight, licensed moneylenders hope to rebuild public trust and prove that ethical lending can support small businesses and household incomes across Uganda.
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