Leaders in Mbale City have raised concern over the increasing number of unlicensed money lenders who confiscate National Identity cards from the borrowers as part of the collateral for loans.

Hussein Kadimba, the Speaker of Mbale City’s Northern Division Council, told COU Family TV that many of the individuals engaged in the money lending business are operating without licenses. He added that the Mbale City authorities have now resolved to force the lenders to return the IDs to the owners or else they take further action against them.

 The money lending business appears to be lucrative and many individuals and briefcase organizations have mushroomed not only in Mbale City but also in the neighboring districts of Elgon Region including Mbale, Sironko, Bulambuli, Manafwa, and Bududa. They offer personal loans and small business loans to borrowers at exorbitant rates.

Hussein Kadimba, the Speaker of the Northern Division Council in Mbale City said that even after the borrower has fully serviced the loan, the unscrupulous money lenders retain their National IDs and keep the borrowers under pressure to take another loan.

Yahaya Was, the Deputy Resident City Commissioner (RCC) in Charge of the Northern Division in Mbale City, said that the RCC’s office which oversees security in the City had taken up the matter since it has now become an issue of security concern. Were noted that taking someone’s National ID, which is a government document as security for a loan is illegal. He said that the City security committee has resolved that the money lenders return people’s National IDs with immediate effect.

According to local leaders, while many of the borrowers approach the money lenders to get money to improve their livelihoods, the loans have instead impoverished them because of the high-interest rates and the short repayment period given to service the loans.  For instance, some of the loans come with an interest rate of 20% per month and the borrower begins servicing the loan as soon as it is processed.

The Village Local Council One chairperson of Afia ward in Mbale City's Northern Division………(Give name)….. says many residents have fled and abandoned their homes and only return in the night for fear of marauding money lenders. In a mini-survey she conducted, the Village chairperson says out of every 10 people, seven don’t have National IDs because they were deposited as collateral for loans from money lenders.

Hadija Nambafu, the female councilor representing Afia Ward in Northern City Division says they have never been briefed on the operations of the money lenders doing business in their areas.