The Uganda Microfinance Regulatory Authority (UMRA) has issued guidelines to online money lenders.
The guidelines follow public outcry over the conduct of online money lenders, on issues of personal data protection, and exorbitant loan interest rates among others.
Information from the authority, which is mandated to regulate the sector, indicates that up to 30 companies are licensed to carry out online money lending in Uganda.
The guidelines launched on Tuesday, stipulate how the lenders and the borrowers will interact, and streamline the conduct of the lenders, especially on how to access and handle their client’s data.
They are also barred from charging illegal interests or additional fees on a loan facility, unless as prescribed by the law.
They also compel online lenders to have a physical address where they can be found in case the need arises.
The address and location have to be well indicated on their mobile applications and easily visible to anyone who wishes to borrow from them.
Online lenders must also not transact any business without a valid operating license.
The Minister of State for Microfinance, Haruna Kasolo in a speech read by Bob Munenne, the assistant commissioner for financial services, said that although digital technologies are supporting financial inclusion, especially through offering credit to people in the remotest areas, the government must protect citizens from being exploited.
He urged digital lenders to practice ethical standards.
Edith Namugga, the UMRA Chief Executive Officer, said that the guidelines are a significant milestone in Uganda’s tier four financial landscape, and will make it more vibrant and stable, promote greater financial inclusion, and establish responsible digital lending practices.
According to Namugga, the tier four financial services providers, serve up to 70 percent of the credit consumers market in Uganda and still growing.
Last year, UMRA licensed up to 1802 institutions under the tier four money lenders and Microfinance Act 2016, of which more than 20 were digital lending platforms.
The guidelines according to Namugga, will enhance the potential of digital leading through transparency and fairness, and they will weed out the unsuspecting players who operate outside Uganda’s borders.
English 