Due to the increase of money lenders in the country, most of the parents with less earnings have to at least get some financial support from them in order to purchase different school requirements for their children and to pay other school dues.
The current interest rate for loans in formal financial institutions is at 9.5%, but parents have decided to suffer high charges and interest rates imposed by money lenders in order to make sure that their children report back to school since most of the schools are requesting for at least a half of the tuition of which is not so easy to
be afforded by most of the parents especially low income earners who have many children.
Since the school fees in most of the schools was hiked, most of the parents have made use of these money lenders regardless of the interest posed to a certain amount
The reason to why money lenders are now considered to be helping the locals is because they are quick and easily accessible than financial institutions.
Since money lenders are interested in the borrowers asset and property, they don’t ask for some things such as a business plan of which is always requested by the formal financial institutions who follow certain procedures.
These people can provide a loan in a short period of time as long as one has something to pledge.
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On the other hand they impose high interest rates on their loans which has made very many people fail to pay back the higher amounts forcing them to lose their property.
Most of these money lenders have made Uganda lose huge sums of money since most of them are not even paying tax which means they are earning but adding nothing to the country.
In some few years to come, this system of borrowing from money lenders may increase poverty in the the country since these lenders lack proper regulation.
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In 2022 the total number of branches of commercial banks and credit institutions in Uganda corresponded to 702, but no one knows the exact number of these money lenders since they increase day by day.
The Government should intervene and monitor the operations of these money lenders since it seems they are doing more harm than good. Cases of domestic violence and suicide have been reported, with a linkage to these money lenders.
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