By Spy Uganda
Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has put the Bank of Uganda (BoU) on the spot over alleged gaps in the regulation and consumer protection of Uganda’s rapidly expanding digital lending industry.
The committee on Monday questioned senior BoU officials over whether borrowers and loan guarantors are adequately protected from abusive lending and debt-recovery practices, as well as whether digital lenders are complying with consumer protection requirements issued by the central bank.
The BoU officials appeared before COSASE to respond to queries contained in the 2025 Auditor General’s report, with lawmakers expressing concern over the growing number of Ugandans accessing loans through mobile phones and digital platforms.
COSASE Chairperson Muwada Nkunyingi directed the central bank to provide Parliament with a comprehensive list of companies licensed or otherwise authorised to provide digital lending services.
The committee intends to summon the lenders next week to scrutinise their lending procedures, contractual terms and debt-recovery methods.
“We need to establish why the Bank of Uganda is regulating this area when seemingly the regulation is not working, to ensure that ordinary Ugandans are protected,” Nkunyingi said.
One of the major concerns raised by MPs was the alleged practice of individuals being listed as loan guarantors without their knowledge or consent.
Lawmakers said some people only discover that their names have been attached to loans when lenders begin pursuing them for repayment.
BoU Governor Michael Atingi-Ego said the allegations were new to him and would require investigation.
He explained that the central bank regulates financial institutions within its legal mandate, while some money-lending businesses fall under the supervision of the Microfinance Regulatory Department in the Ministry of Finance.
The distinction, however, did little to ease concerns among MPs, who want greater clarity on who regulates the rapidly expanding digital credit market and how consumers can seek redress when lenders breach the rules.
The committee also questioned whether digital lenders are giving borrowers sufficient time to understand loan agreements before accepting them.
MPs specifically asked whether borrowers are being given the required three days to review loan agreements, whether the terms and conditions are explained in languages that customers understand and whether borrowers are being subjected to excessive debt-recovery charges.
BoU officials told the committee that supervised financial institutions are required to provide borrowers with key information, including interest rates, repayment schedules and collateral requirements.
They also said borrowers are supposed to receive three days to review loan agreements before committing themselves.
But MPs questioned whether these protections are actually being enforced on the ground, particularly among rural borrowers and customers accessing credit through mobile-money platforms.
The concerns highlight the challenge regulators face as digital lending continues to expand, making it increasingly easy for consumers to obtain credit without physically visiting a bank or traditional financial institution.
The committee was also told that approximately Shs6 trillion in bank capital is currently tied up in court disputes between lenders and borrowers, limiting the ability of financial institutions to recover and redeploy funds.
Atingi-Ego said BoU has been working with the Judiciary to encourage mediation as an alternative to lengthy commercial court battles.
According to the Governor, 527 cases had been referred for mediation, with more than 417 cases already settled.
The cases involved a combined subject matter value of approximately Shs90 billion, demonstrating the potential of mediation to resolve disputes more quickly while freeing up funds that would otherwise remain tied up in litigation.
Beyond digital lending, COSASE also questioned BoU officials over other issues raised in the Auditor General’s 2025 report.
These included an alleged Shs53 billion loss, reports concerning stolen laptops and security breaches at the central bank.
Atingi-Ego declined to comment substantively on some of the issues, saying the central bank would provide written responses to the committee.
He also noted that some matters were before court and therefore could not be discussed in detail.
The COSASE inquiry is expected to continue as the committee prepares to summon digital lenders next week.
The proceedings could provide Parliament with a clearer picture of how Uganda’s digital credit industry operates, whether existing consumer protection safeguards are being enforced and what additional measures may be required to protect borrowers from exploitation while maintaining access to financial services.
For millions of Ugandans increasingly turning to mobile-based credit to meet household and business needs, the committee’s scrutiny could become an important test of whether the country’s regulatory framework is keeping pace with the rapid growth of digital finance.
