Money lenders vow to challenge interest rate cap
Money lenders, under the umbrella of the Money Lenders Association of Uganda, are moving to oppose government-imposed interest rate caps on loans.
This follows a government proposal suggesting that all money lenders should not charge more than 2.8% interest per month. The association argues that this cap is unfair, especially considering that other financial institutions can lend at higher rates.
Addressing jouralists on Wednesday, Edgar Ayebazibwe, a lawyer with Mwesigwa Rukutana Company Advocates, stated that money lenders contribute significantly to the financial sector and that it is unfair for the government to restrict their interest rates.
‘’We have seen micro-finance institutions lending much more than that and these money lenders get money from other financial institutions. Money lenders get money from banks and so you don’t expect the bank to have their interest rates uncaped and in the same sector you have money lenders caped,’’ Mr Ayebazibwe said.
He added that they have written to the Attorney General and the Ministry of Finance to express their concerns about the unfairness of this move. Additionally, they intend to file a lawsuit in the High Court and Constitutional Court to seek an injunction against the implementation of the interest rate cap.
