Uganda Reiterates Ban on Using National ID Cards as Loan Collateral

Uganda’s Minister of Information, Communications Technology, and National Guidance, Chris Baryomunsi, has issued a stern warning against the illegal practice of money lenders demanding national ID cards as collateral for loans. This practice, he emphasized, must cease immediately.

This marks the second time the government has issued such a warning in just over a year, with a similar call from the police in April of the previous year.

During a recent press briefing in Kampala, Baryomunsi, as reported through an X Thread by the Uganda Media Center, reiterated the government’s stance. He highlighted that requiring national ID cards as collateral deprives citizens of access to essential services that require proof of identity.

Baryomunsi stated that this directive aligns with a recent Cabinet decision and directives from the Attorney General’s Office. The Cabinet resolution declared it “illegal and unlawful” to demand a borrower’s national ID card and urged those holding such IDs to return them immediately.

“This is an instruction to all money lenders and lending institutions: do not hold people’s IDs. If you have them, return them and renegotiate collateral terms,” Baryomunsi stressed. He warned that those who defy this directive will be identified and prosecuted according to existing regulations.

Baryomunsi also addressed the issue of fraud in digital lending services, informing the public that the government is collaborating with relevant partners to implement safeguards against online criminals.

As part of efforts to combat digital payments fraud, the government has implemented a measure requiring all digital financial transactions of $260 and above to be conducted using a government-issued ID, as directed by the Bank of Uganda.

Meanwhile, a Forbes article highlights that refugees in Uganda, who face financial exclusion due to the lack of ID cards, are increasingly turning to Bitcoin for financial transactions. A government-issued ID is necessary for opening a bank account in Uganda. The Bitcoin Innovation Hub in Kampala is empowering refugees and asylum seekers by equipping them with skills to earn and use bitcoins to meet their basic needs.

In addition, Uganda is set to commence a mass registration exercise for national ID cards this month.