By KT Reporter
Kitgum District leaders have raised concern over the increasing exploitation of residents by moneylenders, especially those demanding national identity cards as collateral and charging illegal interest rates.
The discussion followed a report by an ad hoc committee formed on 30th May 2023 to look into the complaints of illegalities of moneylenders and financial service providers operating in Kitgum district.
The report by the ad hoc committee was presented during the first council meeting of the 2025/2026 financial year by Dayan Ociti, the chairperson of the Committee, and a councillor of Lalano Sub-county.
In the report, the committee stated that the money lenders it was stated that although the interest rate for borrowing is capped at 2.8% per month or 33.6 per annum, the money lenders in Kitgum are charging between 20% to 40 % per month, compared to traditional banks that charge between 24% to 30% per annum.
The committee also reported that the money lenders have hidden charges, misleading terms and aggressive loan collection practices “where they go up to the [borrowers] bedroom to recover their loans.”
“These practices can trap the borrowers in a cycle of debt, and encourage them to have multiple borrowings to service the bad loan where pressure is being deployed for recovery,” the report stated.
The committee decried the detention of National IDs and ATM cards of borrowers by the moneylenders, which are only released after the full loan repayment.
Whenever the borrowers fail to repay the loan within the agreed time, the lenders “add up to 20% penalty on the overall principal, including interest defaulted on the recovered money,” the report added.
During a heated council session on Wednesday, Bright Olworo, a member of the ad hoc committee, said most lenders in Kitgum operate without the necessary licences or documentation. He called on the RDC and technical officers to verify their legality and monitor operations.
“The law prohibits retaining IDs and ATM cards as collateral. Yet many lenders confessed to us that they hold them for up to three months. This must stop,” Olworo stressed.
Richard Canodonga, the male councillor for Kitgum Matidi Town Council, urged leaders to intensify community sensitisation on the dangers of dealing with unregulated mobile moneylenders.
Canodonga noted that while Uganda operates under a liberal economy, the law still provides clear guidelines for moneylenders.
“In situations where national IDs, which are government property, are being retained by individuals or groups, this is illegal. We need the RDC’s office to intervene immediately, because if we only talk here without action, our people will continue suffering from extortion,” Canodonga said.
Joyce Kevin Atim, the female councillor for Central and Pager divisions, stressed that the detention of National IDs of borrowers had affected their attempts to renew that National IDs and access other services.
Pope Paul Oceng, the male councillor for Labongo Aida West, cautioned the council against taking extreme positions. Oceng argued that while some moneylenders exploit borrowers, clients also share responsibility.
“If you know the business is not good, why do you go there? Customers sustain them. Our duty is to sensitise the people, because regulating moneylenders is a mandate of Parliament,” Oceng said.
Other councillors narrated cases of lenders demanding repayment a day after issuing loans, trapping borrowers in a cycle of debt.
Bosco Oketayot, councillor for Labongo Akwang Sub-county, described the practice as “repatriation,” saying lenders were draining funds from government poverty-alleviation programs such as PDM and Emyooga.
He recommended that LC1 chairpersons be directly involved in loan approvals to protect vulnerable borrowers.
The council requested that the RDC’s office convene a meeting with moneylenders, municipal officials, and LC1 leaders, and present an action report at the next sitting.
Jimmy Ssegawa Ebil, the Kitgum district RDC, using National IDs as collateral, is “totally against the law” and that predatory interest rates were impoverishing families.
Ebil revealed that his office had already tasked the office of the deputy RDC to handle the complaints on moneylenders, and a report had already been written to that effect.
He pledged to peruse the report of the ad hoc committee and communicate within two weeks.
Dayan Ociti, the chairperson of the ad hoc committee, said the council is not against the moneylenders, but they should reduce their interest rates to 2.8%, and start collecting their loans after a month, not daily.
-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
