The minister’s directive is contained in Legal Notice No. 21 of 2024 issued on November 8 and gazetted on November 15.
The Minister of Finance, Planning and Economic Development, Mr Matia Kasaija, has directed that all the Tier 4 microfinance institutions and money lenders can only lend out money to borrowers at the maximum interest rate of 8 % per month or 33.6 % per annum.
The minister’s directive is contained in Legal Notice No. 21 of 2024 issued on November 8 and gazetted on November 15.
Mr Kasaija said this was reached following consultations with the Uganda Microfinance Regulatory Authority (UMRA), which is mandated to regulate and supervise the money lending business in Uganda.
“IN EXERCISE of the powers conferred upon the Minister responsible for finance by section 89 (1) of the Tier 4 Microfinance Institutions and Money Lenders Act, and in consultation with the Uganda Microfinance Regulatory Authority, this Notice is issued this 8th day of November, 2024,” it reads in part.
“This Notice may be cited as the Tier 4 Microfinance Institutions and Money Lenders (Prescription of Maximum Interest Rate) Notice, 2024. 2. Prescription of maximum interest rate In accordance with section 89 (1) of the Tier 4 Microfinance Institutions and Money Lenders Act, the maximum interest rate that a money lender shall charge on the principal or the actual sum of the money advanced as a loan to a borrower, is two point eight percent (2.8 %) per month or thirty-three point six percent (33.6 %) per annum,” it adds.
UMRA has described the development as good news, adding that the government has answered people’s prayers.
“Dear Ugandans, following the public outcry over the exorbitant unregulated interest rate, @mofpedU through Hon @MatiaK5 and Hon. @HonKyeyune have answered your prayers,” UMRA wrote on their social media handle X.
Interest rates for loans from moneylenders and commercial banks have not been capped, leaving lenders free to set their own rates.
