KAMPALA — Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has pressed the Bank of Uganda (BoU) to clarify its role in regulating digital lending and protecting mobile money users whose accounts are allegedly used to recover loans without their knowledge.
The committee, chaired by MP Muwada Nkunyingi, raised concern over complaints that some mobile money users are being listed as guarantors for loans they did not take or knowingly guarantee, with lenders subsequently recovering money from their wallets.
Appearing before COSASE on Monday, BoU Governor Michael Atingi-Ego said the central bank would investigate complaints involving mobile money operators under its supervision but cautioned that some digital lenders fall outside the bank’s regulatory mandate.
He said lenders such as those operating under the Microfinance Regulatory Department of the Ministry of Finance are not directly supervised by BoU.
“We were going to investigate that matter and find out to what extent the entities that were involved in this,” Atingi-Ego told the committee.
He said BoU receives complaints from the public and investigates them where they concern institutions under its supervision.
“If indeed it’s true that the mobile money companies we supervise are involved in this, we will study the facts and take action,” he said.
However, COSASE members challenged the central bank to explain how it supervises payment service providers such as MTN Mobile Money Uganda Limited and Airtel Mobile Commerce Uganda Limited when those platforms are used to disburse and recover digital loans.
Andrew Kawere, Director of National Payment Systems at BoU, said the central bank licenses and supervises payment service providers, but the actual lending may be conducted by separate financial institutions.
He explained that banks can partner with mobile money operators to enable customers to apply for and receive loans through their mobile wallets.
Kawere said digital loans issued by institutions directly supervised by BoU have clear requirements for guarantors, including the use of a Key Facts Document through which guarantors are informed of their responsibilities before a loan is granted.
He said the situation is different where the lender is not supervised by BoU.
“The lenders that have those guarantors you spoke about are under the purview of the Microfinance Regulatory Department of the Ministry of Finance,” Kawere said.
The explanation, however, did not satisfy the committee, with MPs questioning whether BoU’s mandate ends at licensing and supervising the movement of money or extends to examining the circumstances behind transactions conducted through platforms it licenses.
Nkunyingi said the committee was concerned about a regulatory gap that could leave consumers without adequate protection.
He said the committee would examine the law to establish the extent of BoU’s mandate and determine whether the existing legal framework needs to be reviewed.
“We want to appreciate, if you are hiding under the law, then we can as well interrogate further if we may need to recommend a review of the current legal framework,” Nkunyingi said.
The committee also questioned the accessibility of BoU’s complaints-handling system, particularly for members of the public seeking to report disputes involving mobile money and digital lending.
Dorothy Ochola, BoU’s Head of Legal, told the committee that members of the public can submit complaints to the central bank without an appointment.
She said complaints received at the bank’s reception are registered and forwarded to the relevant department for investigation, with complainants given an acknowledgement of receipt.
The committee nevertheless raised concerns about physical access to BoU’s headquarters on Kampala Road, citing the heavy security presence around the building.
BoU officials explained that members of the public with complaints can access the bank through the entrance along Shimon Road, where their complaints can be received and forwarded to the relevant department.
COSASE directed BoU to proceed with investigations into the complaints raised over mobile money-linked loan recoveries and seek information from the licensed operators.
The committee also indicated that it would engage the Microfinance Regulatory Department of the Ministry of Finance and other relevant agencies to establish who is responsible for supervising digital lenders operating outside BoU’s direct mandate.
The inquiry comes amid growing concerns over digital lending practices, particularly allegations involving individuals whose mobile money accounts are used to recover loans after they are listed as guarantors without their knowledge.
