(Kampala) – The Ugandan government has recovered 149 national identification cards that were illegally confiscated by money lenders as collateral for loans, following a crackdown in Lira City.
The Minister of State for Internal Affairs, Gen. David Muhoozi, announced that the police had conducted an operation in the North Kyoga Region on 5 August 2024, targeting money lending companies involved in the illegal practice of taking national IDs from borrowers. “Law enforcement agencies prosecute these cases when lenders are found engaging in such blatant illegal practices,” Muhoozi stated.
The minister was responding to concerns raised by Hon. Mourine Osoru, who highlighted the increasing number of cases in which money lenders were confiscating national IDs from borrowers. Muhoozi emphasized that both money lenders and borrowers were complicit in the practice, as many victims fail to report the incidents to the police or the National Identification and Registration Authority (NIRA). “Citizens must cooperate by avoiding this illegal practice and, if it happens, report to the authorities to retrieve the confiscated IDs,” he urged.
He reminded Parliament that under Section 77(b) of the Registration of Persons Act, Cap. 332, no one has the authority to deprive a person of their national ID. Muhoozi reiterated that national IDs are government property and were not intended to be used as collateral for loans. “National IDs were issued to foster social and economic development, not as security for borrowing,” he added.
Muhoozi also referenced the Money Lenders Regulations (Statutory Instrument No. 8 of 2018), which explicitly prohibits lenders from demanding or accepting national IDs or any other identification documents as collateral for loans. Violators of these laws, he warned, are subject to severe penalties, including fines, imprisonment, or the revocation of their operating licenses.
Looking to the future, Muhoozi mentioned the government’s plan to introduce digital identification cards. “With digital verification, citizens will be able to authenticate their identity electronically, reducing the risk of physical IDs being used as collateral,” he explained. However, he acknowledged that many Ugandans currently lack access to the internet or smartphones, which may delay the full implementation of the system.
Speaker Anita Among underscored the importance of addressing money lending practices by urging the Ministry of Finance to operationalize the Tier IV Microfinance and Money Lenders Act. “We need regulations to curb these exorbitant interest rates. We have a law but without the regulations, it cannot be enforced,” she said, expressing frustration over the delay in the introduction of the required regulations.
In response, Hon. Haruna Kasolo, the Minister of State for Finance, Planning and Economic Development (Microfinance), assured Parliament that the Attorney General was in the process of drafting the regulations. “They will be ready in a month’s time,” he promised.
