The State Minister for Internal Affairs, Gen. David Muhoozi has unveiled government plans to tackle money lenders who are confiscating national identity cards (IDs) from Ugandans as collateral for loans.

In a statement to Parliament on Wednesday, the Minister informed legislators that while the police have taken action against some money lenders involved in this illegal practice, the government is also looking to leverage new innovations.

Gen. Muhoozi revealed that the National Identification and Registration Authority (NIRA) is working on upgrading national IDs by rolling out Digital (Electronic) Identity Cards (E-IDs). He explained that this shift to digital IDs would curb the practice of confiscating physical IDs as collateral for loans, as E-IDs would reduce the need for physical cards for identification.

“NIRA is in the process of upgrading the National ID system by rolling out Digital (Electronic) Identity Cards (E-IDs). One of the key advantages of E-IDs is that they will combat the troubling practice of confiscating physical IDs as collateral for loans by money lenders. With E-IDs, physical cards will no longer be necessary for verification,” Gen. Muhoozi stated.

He added, “This transition reduces the risk of physical IDs being used as security since digital identity verification will remain in the control of the cardholder and authorized institutions. Money lenders will no longer be able to hold national IDs as collateral.”

Gen. Muhoozi’s statement was in response to a concern raised by Arua City Woman MP, Moureen Osoru, on August 1, 2024, who questioned what steps the government was taking to address the illegal seizure of national IDs by money lenders.

The Minister emphasized that the confiscation of national IDs is not only illegal but also poses a serious threat to national security and social stability. He pointed out that many victims of this practice are unable to access essential services that require the presentation of a national ID, such as opening bank accounts and receiving government services.

Although the law criminalizes the deprivation of an individual’s national ID, with penalties including a fine of up to UGX 960,000 or a jail term of up to three years, the practice continues unabated. The Minister reported that during a police raid in Lira City on August 5, 2024, at least 149 national IDs were recovered from money lenders, with efforts underway to prosecute those involved. However, he noted that many borrowers willingly hand over their IDs and are reluctant to report the issue to authorities.

In response to the ongoing issue, Speaker of Parliament Anita Among questioned the delay in implementing regulations under the Tier 4 Microfinance Institutions and Money Lenders Act, which established the Uganda Microfinance Regulatory Authority (UMRA) to oversee money lending operations.

“We have a law without regulations, and we cannot enforce the law without them,” Speaker Among noted.

State Minister for Finance (Microfinance), Haruna Kasolo, assured Parliament that the regulations are being finalized by the Attorney General’s office and pledged to have them tabled within four weeks.

Once the regulations are in place, Members of Parliament will be able to monitor how law enforcement officers implement the law to prevent the confiscation of national IDs by money lenders.parliamentwatch