In Uganda’s current economic climate, borrowing money has become a daily survival tactic for many citizens from businesspeople to ordinary individuals with pressing responsibilities.
As the cost of living soars and incomes stagnate, the once-occasional act of borrowing has turned into a routine for survival.
A decade ago, borrowing was mostly limited to large-scale businesses, and loan repayment periods ranged from a month to a year.
Today, however, people take loans for as little as a single day borrowing in the morning and repaying by evening.
The stress and pressure surrounding such short-term loans have become overwhelming.
Joan Kanyesigye, a roadside clothes vendor in a Kampala suburb, shared her daily struggle with UG Bulletin.
“Every morning, I borrow shs100,000 from a money lender, use it to buy clothes, and sell throughout the day,” she said.
“By 6 or 7 pm, I must return the money with interest, no matter what.”
Joan lamented the high interest rates, describing how the stress affects her physically.
“Sometimes, I feel my heart racing. It’s scary, especially when KCCA or other authorities confiscate my merchandise. I still have to pay back the loan even if I made no sales,” she added. Bad weather also worsens the situation, as rain can wipe out an entire day’s business.
Most, if not all, moneylenders engage in illegal practices, including withholding national ID cards, and coercing borrowers into signing sale agreements for their properties.
On many occasions, the borrowers fail to pay and their security, in form of property is taken.
Beyond physical moneylenders, digital lending apps have flooded the market, offering quick loans in exchange for National Identification Numbers (NIN) and contact details of two referees.
However, defaulting on these loans comes with humiliation these apps often access the borrower’s contact list and begin calling and texting their relatives and friends, labeling the borrower a defaulter.
Telecom companies have also entered the lending space. Airtel’s QuickLoan and Kwasakwasa, and MTN’s WeWole, offer mobile loans ranging from shs3,000 to millions, depending on a user’s transaction history.
Once the repayment period lapses, these platforms automatically deduct money from the borrower’s mobile account.
Ivan Musisi, a trader at Ham Shopping Grounds, recalled how he used Airtel’s QuickLoan to clear taxes on his latest shipment.
“These loans help sometimes, but they also cause stress,” he said. “A customer once sent me money, but before I could even check the message, QuickLoan had already deducted their share.”
The convenience of digital loans has also created room for exploitation.
Some apps charge hidden or exorbitant interest rates, and scammers have used the trust in these platforms to prey on desperate borrowers.
Despite moneylenders being predatory, many Ugandans still go for them.
“Whereas the bank interest is little, I opted to go for moneylenders since their process is easy. In a day, you apply for the loan and it is processed there and then. The money is then sent to my phone instantly unlike the bank where they ask for a number of documents and you have to wait for the loan to be processed in several weeks,” Musisi says.
However, in this “easy” and quick process of getting loans lies the web that the moneylenders use to put high interests on the loans which on most cases make it difficult for borrowers to pay back.
While money lenders and mobile loan apps continue to serve a purpose in emergency situations, many Ugandans are increasingly finding themselves in a cycle of debt and distress raising serious questions about regulation, financial literacy, and the future of informal credit systems in the country.
Recently, President Museveni, during his Parish Development Model (PDM) tours, cautioned Ugandans against relying on predatory lenders.
He noted that their high interest rates stifle business growth and only increase personal and financial pressure.
The Minister for Microfinance, Haruna Kyeyune Kasolo has on several occasions asked Ugandans to join Emyooga, an initiative that allows them join saccos, save money and borrow from their own saccos at a lower interest rate.
He said the highest interest one can be charged on borrowing from Emyooga sacco is 8%, way lower than the 25% charged by moneylenders.
