Don’t take national ID cards as collateral for loans, Uganda govt warns again

Uganda’s Minister of Information, Communications Technology and National Guidance, Chris Baryomunsi, has warned that the practice of money lenders asking for the national ID cards of borrowers as collateral is illegal and must be discontinued forthwith.

This is the second time the government is sending out this warning in a little over a year. The police made a similar call in April last year.

The communication minister briefed the press on this issue recently in Kampala, according to an X Thread by the Uganda Media Center, the government’s official communications platform.

The government is discouraging the practice, arguing that it deprives citizens in such a situation of the possibility of accessing importance services that require proof of identity.

In the course of the briefing, Baryomunsi said the call falls in line with a recent decision of Cabinet and directives from the Attorney General’s Office.

The cabinet resolution noted that it is “illegal and unlawful” for anyone to require a borrower to bring their ID card, and called on those keeping people’s ID to return them immediately.

“This is an instruction that all money lenders, all the institutions that lend money should not be holding people’s IDs. And if they are holding them, please return them and negotiate afresh the kind of collateral that person should be able to deposit,” some points in the thread read. He said all those who shall defy this new call and continue to keep people’s ID cards will be identified and prosecuted in line with the regulations in force.

Baryomunsi also addressed the issue of fraud related to digital lending services, and informed the public that the government was at work with relevant partners in the sector to implement safeguards against online criminals who want to reap where they didn’t sow.

Already, the government is implementing one measure as part of efforts to fight digital payments fraud. A recent directive from the Bank of Uganda requires that all digital financial transactions of $260 and above must be done using a government-issued ID.

Meanwhile, a Forbes article, suggests refugees who are financially excluded in Uganda for want of ID cards, are now turning to bitcoins for financial transactions. A government-issued ID card is required for account opening in Uganda.

A Bitcoin Innovation Hub in Kamapala is empowering refugees and asylum seekers through a program that equips them with skills to earn bitcoins and use them to purchase their basic needs, the article indicates.

Uganda is due to begin a mass registration exercise for national ID cards this month.

Article Topics

financial services  |  identity document  |  identity verification  |  national ID  |  Uganda