The High Court in Kampala has halted the new regulation on money lenders, introduced by government last year
Last year, the Tier 4 Microfinance Institutions and Money Lenders Act came into effect requiring moneylenders to get licensed and begin formal operations or risk being ejected and also established the Uganda Microfinance Regulatory Authority (UMRA) as the subsector’s regulator.
Earlier, moneylenders under their umbrella body, the Money Lenders Union of Uganda Limited and another company, MK Creditors Limited belonging to city lawyer Male Mabirizi dragged government to court challenging the constitutionality of some ‘unfair’ provisions of the act but the case has never been disposed of.
However, in his ruling on Friday, Justice Andrew Bashaija ordered government to halt the enforcement of the new regulations on money lenders until the case against the Attorney General and Uganda Micro Finance Regulatory Authority is disposed of.
“In the interest of fairness and justice of the case before this court the respondents are in the meantime restrained from implementing or enforcing the specific impugned regulations in relation to the applicants i.e. MK Creditors and Money Lenders Union Ltd, pending the outcome of the constitutional petition,” Justice Bashaija said.
The judge said that owing to the earlier petition in which money lenders challenged the powers given to the line minister to determine the interest to be charged, the same group applied for a temporary injunction halting the new regulations until the main case is dealt with, adding that it was only prudent that the order is issued.
“It would hence not be fair or just that the application challenging the impugned regulations is stayed while the impugned regulation respondents are let to be enforced or implemented as against the applicants. This is a matter which this court can in the interim pronounce itself upon by also staying the enforcement of the regulation as against the applicants.”
The judge said that in case the petition by money lenders before court succeeds, they(money lenders) will not have suffered any injustice arising as a result of the enforcement of the regulations, adding that on the other side, if their petition fails, government will also not have suffered any prejudice by the stay and will now be at liberty to enforce the regulations.