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Moneylenders have petitioned the minister of finance seeking a delay on an instrument setting the maximum lending rates for moneylenders.

On Thursday last week, President Yoweri Museveni directed the minister of finance planning and economic development, Matia Kasaija, to come up with a statutory instrument in two weeks to operationalize section 90 of Tier four Microfinance Institutions and Money Lenders’ Act 2016.

Under the statutory instrument, the President wants the minister to control the interest rates charged by moneylenders, as a way of protecting borrowers from outrageous interest rates set by loan sharks.

However, in a letter dated October 2, 2023, to the minister of finance, the moneylenders have asked the minister to stay the statutory instrument citing a court order against such instrument.

“We understand you are rushing to make an instrument setting the maximum lending rates for money lenders. We notify you that you are estopped from doing so and it will be in contempt of court,” Male Mabirizi, the general secretary of Money Lenders Union Ltd said.

The moneylenders, in 2017 petitioned the court under petition no.46 of 2017, seeking among other things, to nullify section 90 of Tier 4 Microfinance and Money Lenders Act 2016, which allows a minister to determine interest rates.

Mabirizi said: “We have since got a court order, from Justice Andrew Bashaija halting implementation of the Act and money lenders regulations, further the ministry of finance assured us by a letter signed by then secretary to treasury Keith Muhakanizi that they will be repealing section 90 of the Act.”

According to Mabirizi, the court order combined with the written undertaking, makes any planned new regulations unlawful and in contempt of court.

Section 90 (1) of the Act states that the minister in charge of finance, may in consultation with the Authority, by notice in Gazette, prescribe a maximum interest rate that a money lender shall charge.

“We, therefore, notify you that your hands to cap moneylenders’ interest rates are tied by your own ministry’s commitments, court order, and constitutional petition 46 of 2017. Capping will amount to contempt of court against you,” Mabirizi stated.

Section 90 (2) states that a money lender who charges an interest that is higher than the maximum interest rate prescribed by the minister commits an offence and on conviction, is liable to a fine not exceeding fifty currency points (sh1m) and the court may, in addition to the fine order that the money lender’s license be canceled and the money lender pays the borrower any money paid in excess as a result of the interest rate charged.