For the past two weeks, investigative journalist Egesa Ronald Leonard through his X account @regesa has been shedding light on a concerning issue plaguing Uganda’s financial landscape. In collaboration with financial crime investigation agencies from the UK and US, his campaign #IllegalOnlineApps has uncovered the troubling findings from StratEdge Consulting, revealing the dark world of illegal mobile lending apps that are fleecing millions from Ugandan citizens. Here are the key revelations from his investigation:
- FinTech Dependency: The business model of these illegal lending apps heavily relies on FinTech services provided by Payments Aggregators, which are licensed and regulated by the Bank of Uganda and the Uganda Microfinance Regulatory Authority .
- Unconsented Emergency Contacts: These apps allow borrowers to include next of kin or emergency contacts without their knowledge or consent. This practice leads to harassment by unprofessional loan recovery agents, causing distress to uninvolved parties.
- Breach of Data Privacy: To use these apps, borrowers must grant access to their call logs, SMS, and contacts, breaching consumer data privacy rights. This invasive requirement compromises personal information.
- Regulatory Violations: Many of the investigated apps are operated by a small number of entities, often violating regulatory guidelines designed to ensure fair lending practices.
- Exorbitant Interest Rates: The apps charge exorbitant interest rates ranging from 28% to 37%, placing a heavy financial burden on borrowers and exacerbating their debt situations.
- Unregistered Phone Numbers: Loan recovery agents frequently use unregistered mobile phone numbers during the recovery process, making it difficult for borrowers to track and report harassment.
- Abusive Loan Recovery Practices: These agents often use threatening, abusive, and derogatory language, further intimidating and distressing borrowers.
- Illegal Access to Call Records: The investigation revealed that these apps illegally access customer call detail records (CDRs), a severe violation of privacy and legal norms.
- Forgery and Impersonation: Document forgery, impersonation of Uganda Police personnel, and threats to borrowers’ contacts are common tactics employed by these lenders.
- Exploitative Business Model: Driven by greed, the business model of these apps exploits borrowers’ reputations as collateral, perpetuating a cycle of financial abuse and distress.
Regulatory Inaction:
Despite mounting evidence of these illegal operations, Ugandan authorities, including the Uganda Communications Commission (UCC), UMRA, BOU, Financial Intelligence Authority (FIA), and Uganda Police Force (UPF), have remained silent. This inaction is particularly concerning given Uganda’s recent removal from the Financial Action Task Force’s (FATF) grey list for money laundering. Some of the Apps that have been made mention of include Mangu Cash, Ok Loan, Cash Pulse, Credit Lap, Quick Loan, Sente Yo, Lever Credit, Sente Hub, Quick Sente, UCredit, UKash, SenteYo, LeverCredit, Fly Loan and Dove Cash.
Questions Remain:
Why are authorities not taking decisive action against these illegal online apps? Are there underlying factors hindering enforcement? What can be done to protect Ugandan citizens from these predatory practices?
As the investigation continues, pressure is mounting on authorities to address this growing crisis and hold those responsible accountable.
