KAMPALA – Microfinance Minister Haruna Kasolo has come up with many ways to revive and support the operation of different Micro finance institutions in Uganda.
Kasolo who was reinstated to serve the second term as Minister of Microfinance has said that he is going to set aside funds for Microfinance institutions.
“I feel like it is cheating to hear Ugandans getting loans at a high interest rate like 36% yet the companies giving out the loans also obtained the loans from their sources at rates that are friendly,” Kasolo said during a meeting with the Premier Credit management team on Thursday.
He explained that if a microfinance or a loan company obtains a loan from their external sources at a rate of 13%, the least they could do when giving out loans to their clients is double the rate at which they acquired the loan but not extend it to as much as 36%.
To deal with the phenomenon of high interest rates, Kasolo shared that he is going to work upon creating funds to set a side at the Microfinance Support Centre (MFSC) that will be borrowed at low interest rates.
MFSC will also consider slashing the interest rate to at least double the one given to them by Microfinance support centre.
“Regardless of the high interest rates, Ugandans will never fear to go for any loans but rather will suffer the aftermath,” he said.
Kasolo also addressed the issue of Microfinance institutions adopting Payroll where the loan is deducted by the lending company from the person’s bank account.
He warned all those that use the payroll method to steal Ugandans hard earned money saying they are doing it wrongly.
He gave a scenario where a client asks for a loan and it is to be paid back by deducting on his work salary after a period of one year but you find a company still deducting even after the loan has been fully paid.
Premier Credit being one of the Microfinance institutions with branches all over Uganda serving 21,600 customers with 52% of them being Females and 48% males. Premier Credit boasts of 54 branches in Uganda and their main focus is Small Medium Enterprises although currently they are facing a big challenge of the high cost of borrowing which was caused by the lockdown.