By Our Reporter
NATIONAL
Government has capped interest chargeable by Tier 4 Microfinance Institutions and Money Lenders in fulfillment to President Yoweri Museveni’s promise to tackle the issue of exorbitant interest rates charged by the unregulated Money Lenders.
The Cap is contained in a Legal Notice Supplement by the Minister of Finance, Planning and Economic Development, Matia Kasaija dated 8th November, 2024.
In the Tier 4 Microfinance Institutions and Money Lenders Notice 2024 (Prescription of Maximum Interest Rate), the Minister orders that the maximum interest rate a Money Lender can charge on the Principal/Actual money lent is 2.8% per month.
Consequently, the Maximum interest rate chargeable on the Principal/Actual money advanced to a borrower as a loan per annum or year is 33.6%.
Kasaija says he has taken this decision as the Minister responsible for Finance and in consultation with the Uganda Microfinance Regulatory Authority.
Money Lenders have on average been charging 10% per month that results into about 126% interest per year.
Tier 4 Microfinance Institutions include SACCOs, non-deposit taking microfinance institutions, self-help groups; and community based microfinance institutions.
