As the sun prepares to set on the Uganda Microfinance Regulatory Authority (UMRA), a withering report by the Auditor General lays bare a sobering truth.
In just 12 months before its curtain call, UMRA appears to have ceded ground on the very responsibilities it was created to uphold: protecting Uganda’s most vulnerable borrowers.
The Auditor General’s report, for the year ended June 2024, reads like a chronicle of missed mandates, abandoned reforms, and silent complaints.
It paints a picture of a regulatory authority struggling to stay afloat in the wake of political inertia, budget shortfalls, and governance paralysis; all against the backdrop of an impending institutional death sentence, courtesy of government’s rationalisation agenda.
A regulator without teeth
At the heart of the storm is UMRA’s failure to license 827 microfinance institutions and money lenders during the 2023/24 financial year — a lapse that has effectively left a large swath of Uganda’s informal financial sector operating in regulatory darkness.
The unlicensed institutions, some known to be active in the market, continue to lend and recover loans, unchecked and unsupervised.
Of the 827 cases, 267 licenses had already been approved by the Licensing Committee but were never printed.
Another 600 had been printed but remained unsigned, stalled indefinitely due to the absence of a board chairperson, whose signature is a legal requirement for issuance. The position has been vacant since February 2024.
“The lack of a board chairperson has greatly hampered the licensing mandate of the Authority,” the Auditor General noted.
Meanwhile, borrowers across the country remain exposed to unscrupulous actors, without recourse, oversight, or redress.
But that is not all. UMRA, entrusted by law with protecting the interests of Sacco and microfinance clients, received 410 complaints in the year under audit.
The Authority claimed to have resolved 182 of them, but the Auditor General’s review of its internal Complaints Receiving System found no evidence to back that figure.
Worse still, the Complaints Review Committee, a body tasked with investigating and closing such cases — had no meeting records or decision documentation to prove action.
The system itself didn’t reflect the status of resolved cases, rendering the Authority’s claim unverifiable.
Even more alarming, UMRA had no formal policy in place to guide how complaints should be received, processed, or closed.
Without such a framework, the audit warns, clients remain at the mercy of discretion, delays, and inconsistent decision-making.
The report also methodically lists a catalogue of statutory functions that UMRA either failed or refused to implement.
Key among them: No publication of licensed Saccos, despite a legal obligation to publicize them, no Sacco stabilization fund to protect savers from collapses, no Sacco protection fund, despite being a cornerstone of the Tier 4 Act, 2016 and no regional presence, limiting oversight to Kampala despite the sector’s vast rural footprint
Stephen Chikovore, Old Mutual General Insurance’s CEO in Uganda to Step Down in January 2026Worthy to note is the incomplete licensing enforcement, with many unlicensed institutions still operating freely.
In one damning section, the Auditor General reveals that UMRA failed to establish a comprehensive database of Tier 4 institutions, noting inconsistencies between what was reported in financial statements and what was captured in its IT systems.
Even where attempts were made to regulate, the efforts fell short. For instance, the Digital Lending Guidelines were gazetted in March 2024 — a welcome move — but enforcement remains toothless.
Illegal digital lenders continue to prowl the market, targeting low-income earners with exorbitant interest rates and abusive recovery tactics.
Budget blues
Behind the operational stagnation is a story of broken budget promises. Whereas a budget of UGX 12.215 billion was approved for the 2023/24 financial year, only UGX 10.885 billion was released.
The shortfall of UGX 1.33 billion derailed 13 priority programmes, ranging from ICT system upgrades and financial literacy workshops to mystery shopping and compliance monitoring.
Even of the funds that were released, not all were spent effectively. Of 91 planned activities: 36 were fully implemented, 25 only partially implemented, and 13 not implemented at all, despite being fully funded.
Examples of what didn’t happen?
Only one out of four planned board benchmarking visits was completed — the rest stalled by the expired board tenure. 68 out of 400 consumer complaints were formally closed.
A planned publication of licensed institutions in the gazette was never done and no enforcement was undertaken for illegal lending practices.
Even in the area of inspection and monitoring — the lifeblood of any regulator — UMRA fell short. While 1,000 inspections were planned, only 983 were carried out. Follow-ups on compliance and mystery audits were largely abandoned.
Rationalisation
With all this happening, the situation was compounded further government’s Rationalization of Agencies and Public Expenditure (RAPEX) plan — a sweeping reform meant to streamline government agencies and eliminate duplication.
Under this plan, UMRA will be dissolved by June 30, 2025, and its functions absorbed into the Ministry of Finance.
But the rationalization appears to have already gutted UMRA’s morale and momentum. In their response to the audit, management blamed many of the failures — from staff shortages to unimplemented programmes — on the uncertainty and transition headaches caused by RAPEX.
Still, that explanation offers little comfort to the millions of Ugandans whose savings, loans, and financial dignity rely on effective oversight of microfinance institutions.
The Auditor General has made several recommendations, including: harmonising Sacco regulation among multiple ministries, building Sacco capacity for compliance, and adopting a robust complaints-handling policy.
