By Leonard Kamugisha Akida
NATIONAL
Gov’t urged to expand access to affordable credit
The Forum for Democratic Change (FDC) has urged the Government to make formal loans more accessible to Ugandans to reduce dependence on predatory money lenders and expensive digital credit.
FDC deputy vice-chairperson for the Western region and former Kasese Municipality MP, Robert Centenary, said limited access to affordable credit was exposing unemployed and underemployed Ugandans to financial exploitation.
Centenary made the remarks during the party’s weekly press briefing at its headquarters in Najjanankumbi, Kampala, on Monday.
He said many young people enter the boda boda business through asset-financing companies and micro-credit firms because they cannot access affordable loans from commercial banks.
“The boda boda economy has become one of the main destinations for Uganda’s unemployed and underemployed youth,” Centenary said.
He said many riders acquire motorcycles through hire-purchase arrangements involving an initial deposit and regular instalments, but risk losing the motorcycles after failing to clear relatively small outstanding balances.
“When the bike is taken, the rider’s income stops the same day,” he said.
Centenary warned that repossession cuts off riders’ livelihoods, leaving some unable to support their families and potentially pushing them into criminal activities.
The FDC proposed the establishment of a Boda Boda Savings and Protection Cooperative and a medical insurance scheme to provide riders with access to affordable credit, medical care, pensions and accident insurance.
Centenary said part of riders’ daily payments could be channelled into an insurance scheme to help meet medical bills and support families when a breadwinner is injured.
The party also called for cheaper credit schemes targeting youth, women, persons with disabilities, pensioners and veterans.
It proposed farmer banks in agricultural areas, the restoration of the Cooperative Bank and the strengthening of savings and credit cooperative organisations at parish, sub-county and district levels.
The FDC further urged the Government to enforce laws against illegal and unregistered money lenders and digital loan applications accused of using threats, blackmail and harassment to recover debts.
Centenary said the Government should address the shortage of affordable credit rather than focusing only on the consequences of indebtedness.
“The condition that makes predatory lending possible is poor access to affordable credit,” he said.
The party also called for a reduction in the 0.5% excise duty on mobile money withdrawals, arguing that the levy increases the cost of accessing money and hurts low-income earners, small businesses and mobile money agents.
Centenary said government was effectively taxing the same income multiple times as it moves from salaries to mobile wallets and is later used to purchase goods and services.
He urged the Government to shift more of the tax burden towards telecommunications companies’ profits and reduce charges on mobile money users.
The FDC said cheaper mobile money transactions would promote financial inclusion, protect agents’ incomes and support small businesses that depend on digital payments.
