KAMPALA, Uganda — The Microfinance Regulation Department has issued Uganda’s first Digital Lending Guidelines, a move designed to bring the rapidly growing industry under government oversight and eliminate predatory practices.
The new regulations transition the sector from a legal gray zone into a formal framework. Previously, digital lenders operated with minimal supervision, resulting in interest rates that fluctuated between 6 percent and 120 percent, inconsistent terms and reports of abusive debt collection methods.
Regulators say the guidelines will prioritize consumer protection and market transparency. Edith Tusuubira, commissioner of the department, said during the launch of an industry code of conduct that the formalization of the sector is essential for national economic stability.
“We cannot talk about responsible lending without responsible borrowing,” Tusuubira said. “If Ugandans borrow and do not pay back, the country cannot grow.”
The move comes at a critical time for the sector. As of June 2025, digital lending volumes in Uganda reached an estimated 3.5 trillion shillings. However, high costs and lack of transparency have historically prevented many of the country’s micro, small and medium enterprises from accessing the credit they need to expand.
Under the new rules, adherence to a standardized code of conduct is mandatory for any firm seeking a license. Tusuubira warned that companies that do not align with the compliance framework will be denied authorization to operate.
“Self-regulation alone cannot suffice,” she said. “If you are not part of it, we shall not recognise you.”
The guidelines bring Uganda in line with regional peers like Kenya and Nigeria, which have also tightened oversight to protect borrowers from predatory apps. In Kenya, licensed digital credit providers disbursed approximately $594 million in the first half of 2025 under a similarly regulated environment.
Bank of Uganda officials expressed support for the new measures, noting that a definitive legal framework is necessary to ensure the sector provides a dependable credit lifeline rather than a financial trap for households and small businesses.
