Although very few people will admit it, most of us have used the services of a money lender, also known as a loan shark. Loan
sharks come in handy when you need to fix those quick solutions where no one will be willing to lend you money or they too are
probably as cash-strapped. The situation became even worse over the last 2 years as commercial bank lending rates went up as high as 30 percent and as a result lending procedures had to be tightened, starving the economy of the much needed credit.
This opened up a huge window for money lenders, who took advantage of the situation to step in as the saviors of the day. Because of the high interest margins, money lending has sucked in almost everyone, including: government officials, members of parliament, and the business community. Monthly interest rate can go up to 35% depending on the amount, period, perceived risk and collateral presented.
Mrs. Mary Gumisiriza is a director and owner at Mega Trust Investments Limited, one of the financial advisory services in town. She says money lenders are feeding off the inefficiencies of the conventional banking system and borrowers’ impatience. “People are running to money lenders because of the slow process followed by commercial banks in giving out loans and also on the collateral requirements to secure the loans. On one hand banks must follow this procedure in order to protect depositors’ money, but the borrowers are impatient
