Kampala. Bank of Uganda has warned Ugandans against borrowing from non-regulated lenders, saying they are not safe bets.
Such lenders, according to the Central Bank, include unregistered Saccos and micro-finance institutions, which are estimated to have a combined annual turnover of more than Shs4 trillion.
Speaking at the launch of a new Opportunity Bank branch in Kamdini, Gulu District, Mr Andrew Kawere, the Bank of Uganda deputy director for non-banking financial institutions, said: “Increased usage of non-regulated lenders is unsafe because such institutions do not offer a recourse mechanism in-case of service dissatisfaction.” Customers, he said, must take advantage of a number of tailor-made services built by certified institutions to take credit facilities that have proper repayment plans.
A number of Ugandans draw loans from money lenders whose registration status is unclear.
The new Opportunity Bank branch in Kamdini, has been established with the support of the Agribusiness Initiative Trust, which seeks to widen financial inclusion in particular, among the farming communities.
Ms Annet Nantumbwe, from Agribusiness Initiative Trust warned Ugandans to stop heavy borrowing to support micro enterprises, arguing that this is “not effective in the long run.”