KAMPALA — Telecom companies Airtel and MTN have denied directly deducting money from customers’ mobile wallets without consent or requiring guarantors for digital loans, as Parliament investigates complaints about high interest rates, unauthorised deductions and the regulation of online lending platforms.
The companies were responding to concerns raised before the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), chaired by Kyadondo East MP Muwada Nkunyingi, during a meeting with officials from Airtel Money and MTN Mobile Money.
Airtel Mobile Commerce Uganda Limited Managing Director Japhet Aritho and MTN General Manager for Corporate Services Dennis Kakonge told the committee that the telecom companies do not lend their own money because they are not licensed financial institutions.
Instead, they provide digital platforms through which customers access loans from partner financial institutions.
Aritho said Airtel’s digital lending products are unsecured, with the cost of borrowing determined in partnership with the institutions that provide the capital.
He explained that one Airtel overdraft product attracts a two per cent processing fee and an additional one per cent per day for up to three days.
Other term-loan products, with repayment periods of 14 or 30 days, attract interest rates ranging between nine and 14 per cent, depending on the product and the borrower’s risk profile.
Aritho attributed part of the high cost of digital loans to the risk of default, saying lenders factor non-performing loans into the charges imposed on borrowers.
He nevertheless told MPs that Airtel would engage the institutions providing the capital to explore ways of reducing the cost of borrowing.
“We will go back, look at what opportunities we have and negotiate with the owners of capital so that we can be able to bring it down,” Aritho told the committee.
Kakonge said MTN would submit detailed information on its various digital loan products, including interest rates, fees, repayment periods and terms and conditions.
His response followed concerns that some borrowers may accept digital loans without fully understanding how much they will ultimately repay or when the loan becomes due.
Kakonge said MTN’s digital loans are also unsecured and offered for fixed periods, making them relatively high-risk products.
However, MPs questioned whether telecom companies could escape responsibility for consumer complaints simply because the actual loans are provided by partner financial institutions.
Committee chairman Nkunyingi said MTN and Airtel remain central to the digital lending system because customers interact directly with their platforms, while loan disbursement and recovery are conducted through mobile money accounts.
He said telecom companies therefore have a responsibility to account for third-party arrangements that directly affect consumers.
“The issue is of charges,” Nkunyingi said, directing the two companies to provide updated and comprehensive information on all loan products processed through their platforms, including the applicable interest rates and other charges.
The committee also questioned allegations that money is sometimes recovered from people who did not personally take out the loans, including claims that funds are deducted from mobile wallets without the account holder’s authorisation.
Lugazi Municipality MP Richard Senteza said the companies appeared to be shifting responsibility among telecom operators, lending institutions and regulators while consumers continued to report losses.
He challenged the companies to explain who should be held accountable where money is allegedly deducted from a person’s mobile wallet without consent.
Senteza also questioned arrangements under which another person could potentially bear the consequences of a borrower’s default.
He asked why a customer who had not borrowed money should lose funds from their mobile wallet because another individual had failed to repay a loan.
The MP said the committee needed clear answers on who enforces consumer-protection rules in the digital lending sector and what mechanisms are available to customers seeking recovery of money allegedly deducted without authorisation.
MPs also raised concerns about the cost of digital borrowing, citing a case in which a loan of Shs480,000 reportedly increased to about Shs528,750 after 28 days.
Kakonge said some MTN loan products attract access fees and rollover charges, which are disclosed to customers.
The committee, however, indicated that it would examine the broader structure of digital lending charges rather than rely solely on individual complaints.
MPs further questioned how telecom companies track borrowers who change their mobile numbers after defaulting.
Kakonge said information on borrowers is available through credit reference mechanisms, while telecom companies are required to comply with privacy and data-protection obligations.
The officials also told the committee that their companies have undertaken financial-literacy campaigns aimed at encouraging responsible borrowing.
MTN said it launched a responsible borrowing campaign in August to educate customers about borrowing within their ability to repay.
The committee also heard concerns about the growing use of unlicensed online lending applications and the need for stronger coordination among the Bank of Uganda, Uganda Communications Commission and other relevant regulators.
Ndorwa West MP Eriab Naturinda questioned whether agreements involving telecom companies, banks and regulators receive adequate scrutiny, including whether the Solicitor General is consulted where such arrangements have implications for consumers.
The committee directed Airtel and MTN to submit detailed written responses on their digital loan products, charges, repayment terms and consumer-protection mechanisms.
Nkunyingi said the committee would continue engaging the Bank of Uganda and other relevant agencies before finalising its findings.
He also warned that Airtel and MTN could be summoned again as the investigation continues.
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