Ugandans choosing MDIs over banks, UMRA reveals

The Executive Director Uganda Microfinance Regulatory Authority (UMRA) says 86 percent of the borrowing in Uganda is happening in the Tier IV sector
“A recent study shows that most Ugandans have ditched banks for Microfinance Deposit-taking Institutions (MDIs),” Ms Edith Namugga Tusuubira, said as VisionFund Uganda opened a branch in Iganga District and the first in Busoga Sub-region on September 12.
UMRA is a government regulatory agency established by the Tier IV Microfinance Institutions and Moneylenders Act (2016) to licence, regulate and supervise all non-banking financial institutions, including Saccos, Non-Deposit Taking Microfinance Institutions, Moneylenders, and self-help groups, among others.
Ms Tusuubira added: “Eighty-six percent of the borrowing in Uganda is happening in the Tier IV sector, and if 86 percent of you are borrowing and lending from this sector, it means we have become a key stakeholder in the development of this country.”
She further explained that when they assumed office five years ago, they found 200 institutions. That number has since grown to 2,002, all of which have all been uploaded on the UMRA system.
“Use your phone to email all complaints against lenders who are abusing you; do not allow yourself to be abused. Next month (October), we are going to see that whoever files a complaint on our system is immediately helped,” she added.
Ms Tusuubira said they have so far recovered houses from unscrupulous moneylenders through intervention which is only possible for those who borrowed from fully licensed organisations that have a UMRA certificate.
She said UMRA is compiling whoever has borrowed from this sector because there are people who are issuing out money using phone Apps without permission or licences. “I am warning you against easily falling prey. However much you need money, try as much as possible to borrow from institutions that we supervise and have branches or offices.”
UMRA, she said, is soon coming up with a Credit Information System (CIS) to ascertain who is lending and borrowing, adding that in future, it will be hard to do multiple borrowing.
The newly-opened VisionFund branch in Iganga District brings the total number of branches to 24 and seven field offices. Previously, VisionFund Uganda customers from Busoga had to travel to either Tororo, Mbale or Soroti district for services; however, the newly-opened branch will now serve 10 other districts in the Sub-region, including Jinja, Mayuge, Kaliro, Luuka, Buyende, Kamuli, Namutumba, Bugiri, Namayingo, and Bugweri.
VisionFund Uganda chief executive officer, Ms Mercy Sande Ainomugisha, said the new branch will provide tailored credit solutions to empower local entrepreneurs, especially women and youth, to achieve sustainable growth through financial literacy.
“For over 25 years, we have been dedicated to transforming lives, having positively impacted nearly 250,000 children in rural and vulnerable communities across Uganda,” Ms Ainomugisha said, adding that they have invested in digitisation to enable their customers to do business without going to the branch.
World Vision Uganda National Director, Jeremiah Nyagah, said: “VisionFund is born out of World Vision; the newly-opened Iganga branch is young, but we are already seeing the impact. VisionFund has extended its tentacles to the most-vulnerable communities.”
He added: “VisionFund and World Vision have a lot in common as we both aim at impacting on the lives of vulnerable children.
“Our plan and strategy are to grow more branches in the Eastern part of the country. As World Vision, our five-year plan is to increase our presence in Busoga Sub-region.”
The Executive Director Association of Microfinance Institutions of Uganda (AMFIU), Ms Jackline Mbabazi, said: “VisionFund Uganda is unique, has funds and has been supportive to the sector.”
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