Uganda: High Taxes On Micro Lenders Frustrating Financial Inclusion

Kampala — The high taxes instituted on Savings and Credit Corporative Associations and micro lenders continue to hinder financial inclusion, according to the Stromme Microfinance chief executive officer.

Speaking at celebrations to mark 25 years of operations in Uganda, Mr Paul Katende the Stromme Microfinance chief executive officer, said government has failed to appreciate the role of micro lending in boosting financial inclusion given the heavy taxes instituted on Saccos and microfinance institutions.

"We are heavily taxed. We are regarded as just mere companies in a country that are making profits," he said, noting government should put in place deliberate policies that uplift micro lending institutions.

In 2016, government dropped taxes on Saccos and other micro lending institutions but were later reinstated with a requirement that Saccos will be charged income tax of 30 per cent on their net profits

Mr Katende said Saccos and micro lending institutions extend financial services to the poor, which helps to cover a large gap of the unbanked as well as help extend credit through which businesses and households have been uplifted.

"We have been able to help the enterprising poor involved in income generating activities through giving them loans to grow their businesses," he said, adding government should formulate policies to enable Saccos and micro lending institution provide other services beyond lending.

He also decried unfavourable competition that has seen the industry infiltrated by politicians and rogue operators.

However, Mr Richard Nyanabo Kirungi, a Ministry of Finance principal economist, said government was willing to support Uganda Microfinance Regulatory Authority to first-track laws that to protect micro finance institutions.


In 2016 government enacted the Tier 4 Microfinance Institution and Moneylenders Act that provide required standards in the micro lending sector. However, according to Mr Kirungi, there are some proposed amendments awaiting approval.

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