19 May 2017

Uganda: MP Nsereko Seeks Bill to Cap Interest Rates

Kampala Central MP Muhammad Nsereko is itching to push through a law that would see lending rates of banks regulated in spite of government's assurances that it would not enact such a law.

The Observer has seen Nsereko's letter dated May 10, instructing the House's director of the department of legal and legislative services to draft a private member's bill to cap interest rates.

Kenya capped interest rates last year at about 14.5 per cent per annum, a move that was majorly seen as an election issue. Since then, several political figures and traders in Uganda have called on government to have bank lending rates regulated.

Ugandan lending rates average 23 per cent per annum, a figure deemed by many as too high for business to thrive. Government and bankers insist the high interest rates are due to the tough economic conditions and high cost of money.

Last week, David Bahati, the minister of state for Planning, said capping interest rates was not a solution. He added that government can only regulate the high interest rates, although he did not explain how it can be done.

Nsereko also wants parliament to address the issue of emergency bailouts for stressed businesses as well as rent restrictions. Recently, parliament passed the Income Tax Amendment Act 2017, which bars property owners in any part of Uganda from charging rent in foreign currency.

Another issue addressed in Nsereko's letter is profit repatriation. He notes that a private member's bill be crafted to see how Uganda can restrict foreigners investors from taking away all the money they earn.

Today, Uganda has a liberalised capital account and investors are free to take away whatever amount of money they make in the country.


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