Swoop down on illegal moneylenders
Nov 17, 2009
EDITOR—Addressing journalists on September 13, Mbarara RDC Clement Kandole remarked that money-lenders commonly known as “<i>kafuna</i>†are destroying Savings and Credit Cooperatives (SACCOs). This is because people shun SACCOs for fear of bureaucr
EDITOR—Addressing journalists on September 13, Mbarara RDC Clement Kandole remarked that money-lenders commonly known as “kafuna†are destroying Savings and Credit Cooperatives (SACCOs). This is because people shun SACCOs for fear of bureaucracy associated with the lending process, thereby making it too long.
But there is more that the public is losing than the SACCOs. Apart from destroying SACCOs, money lenders have fleeced the unsuspecting public of their assets ranging from land mortgaged as security to exorbitant interest rates.
Unfortunately, the RDC seems to be more concerned about the interest rate of SACCOs in total disregard of the communities’ welfare.
I call upon the responsible authorities to come to the rescue of the local people whose ignorance is being exploited to the benefit of these illegal money-lenders. Many of them are not legally licensed as required by Section 2 of the Money Lenders Act, Cap.273. This means they don’t have the authority to enter into legally enforceable money lending agreements.
Secondly, all these offences are being visited on the unsuspecting public when our leaders, especially local leaders are watching! Such leaders behave like accomplices to the illegal money lenders! I applaud RDC Kandole that he has realised that illegal money-lenders are sabotaging SACCOs.
However, he should stretched his surveillance to find out whether in reality these moneylenders benefit the communities or not, and take corrective action to rid the public of these extortionists.
Recently, I visited my home area in Kagongi and Rubindi sub- counties in Kashaari and found many people decrying the activities of the illegal money lenders. Some of them have had their land confiscated in dubious dealings with kafunas. I am told the kafunas trick their clients to ensure that by hook or crook they attach the assets mortgaged as collateral.
This is in total violation of not only the agreement entered into between the money lender and the borrower, but also the provisions of the Money Lenders Act. My clandestine research reveals that a day to the repayment date, the money lender switches off his or her phone so that on the due date of collection it is impossible for the borrower to reach him or her.
The following day the moneylender storms the borrower claiming breach of the loan agreement and seeking to fore-close on the collateral without even giving the borrower an opportunity to repay within reasonable time!
Section 7 of the Money Lenders Act invalidates such contracts, and according to subsection 2 of the same section, the moneylender is only entitled to charge simple interest from the date of default until the loaned money is repaid in full but not to compound the interest.
Confiscation of the collateral without giving the borrower an opportunity to repay is tantamount to compounding of interest—an act that is illegal under the aforesaid section.I call upon the Government to act and save the victims of these money sharks.
President Museveni recently expressed his concern about illegal moneylenders.Since he is aware, I hope necessary action will be taken to rein in these illegal moneylenders.
A. Ntegyereize Njunwoha
ntegean@yahoo.com
But there is more that the public is losing than the SACCOs. Apart from destroying SACCOs, money lenders have fleeced the unsuspecting public of their assets ranging from land mortgaged as security to exorbitant interest rates.
Unfortunately, the RDC seems to be more concerned about the interest rate of SACCOs in total disregard of the communities’ welfare.
I call upon the responsible authorities to come to the rescue of the local people whose ignorance is being exploited to the benefit of these illegal money-lenders. Many of them are not legally licensed as required by Section 2 of the Money Lenders Act, Cap.273. This means they don’t have the authority to enter into legally enforceable money lending agreements.
Secondly, all these offences are being visited on the unsuspecting public when our leaders, especially local leaders are watching! Such leaders behave like accomplices to the illegal money lenders! I applaud RDC Kandole that he has realised that illegal money-lenders are sabotaging SACCOs.
However, he should stretched his surveillance to find out whether in reality these moneylenders benefit the communities or not, and take corrective action to rid the public of these extortionists.
Recently, I visited my home area in Kagongi and Rubindi sub- counties in Kashaari and found many people decrying the activities of the illegal money lenders. Some of them have had their land confiscated in dubious dealings with kafunas. I am told the kafunas trick their clients to ensure that by hook or crook they attach the assets mortgaged as collateral.
This is in total violation of not only the agreement entered into between the money lender and the borrower, but also the provisions of the Money Lenders Act. My clandestine research reveals that a day to the repayment date, the money lender switches off his or her phone so that on the due date of collection it is impossible for the borrower to reach him or her.
The following day the moneylender storms the borrower claiming breach of the loan agreement and seeking to fore-close on the collateral without even giving the borrower an opportunity to repay within reasonable time!
Section 7 of the Money Lenders Act invalidates such contracts, and according to subsection 2 of the same section, the moneylender is only entitled to charge simple interest from the date of default until the loaned money is repaid in full but not to compound the interest.
Confiscation of the collateral without giving the borrower an opportunity to repay is tantamount to compounding of interest—an act that is illegal under the aforesaid section.I call upon the Government to act and save the victims of these money sharks.
President Museveni recently expressed his concern about illegal moneylenders.Since he is aware, I hope necessary action will be taken to rein in these illegal moneylenders.
A. Ntegyereize Njunwoha
ntegean@yahoo.com