Kasolo vows crackdown on rogue moneylenders

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Microfinance state minister Haruna Kasolo has issued a stern warning to moneylenders involved in illegal practices, particularly those confiscating national identity cards as loan collateral, vowing government action to bring them to book.

Speaking during the launch of the Microfinance Forum at Hotel Africana in Kampala on Tuesday, June 15, 2025, Kasolo said the Government will no longer tolerate unregulated moneylending practices that are exploiting vulnerable Ugandans.

He revealed that no new licences will be issued to online moneylenders as part of ongoing efforts to sanitise the sector.

“We want sanity in the sector,” he said.

“Uganda is currently requiring all citizens to renew their national identity cards, but many people cannot because their IDs are being held by moneylenders. This must stop.”

Describing the microfinance sector as “very dirty,” Kasolo said his ministry is committed to tightening regulation and has already initiated steps to revoke licences of non-compliant lenders.

“I can't allow this. I have spoken to the responsible minister, and many of these licences are going to be recalled,” he said.

Despite the existence of policy instruments such as Legal Notice No. 21 of 2024, the sector still faces multiple challenges, Kasolo noted.

These include the high cost of borrowing, particularly for smallholder farmers, exorbitant interest rates, slow uptake of digital finance tools, low levels of financial literacy and weak consumer protection mechanisms.

The minister also took aim at savings and credit cooperative organisations (SACCOs) and moneylenders who are supposed to provide affordable credit but instead charge interest rates higher than those of commercial banks.

“They are supposed to be a cheaper option, but in reality, many are more expensive than banks,” he said.

Reform the sector

Responding to the minister’s remarks, Moneylenders Association president Jonan Kwandanaho defended some operators in the sector, saying as an association they provide a necessary service and do so responsibly.

He said the lenders play a key role in bridging gaps left by traditional financial institutions.

“Our aim should not be to shut them down,” he said, referencing the Government’s broader goals under the National Development Plan IV, which prioritises financial inclusion.

“If we simply close them down, will that solve the problem?” he asked.

“The better approach is to reform the sector so that it serves the people without exploitation.

“Not all moneylenders are exploitative,” Kwandanaho added.

“Some of our members charge interest rates as low as 2.8% monthly, which is about 30% per annum—lower than what some banks offer.”