Uganda Toughens on money lenders confiscating National IDs

The Prime Minister, Robinah Nabbanja, has condemned the confiscation of National Identity Cards (IDs) by money lenders as collateral for loans, describing the practice as a violation of citizens’ rights and a threat to national security.

Speaking during plenary, during the Prime Minister’s Time which is a session dedicated for answering MPs questions, Nabbanja outlined several government initiatives to curb this growing issue and safeguard the dignity and rights of Ugandans.

The question on the vice of money lenders confiscating people’s IDs after they get a loan was raised by Hon. Mourine Osoru, the Arua City Woman Representative.

The Prime Minister underscored the critical role of National IDs as proof of identity, nationality, and access to essential services. She said that without these documents, individuals are unable to open bank accounts, receive government services, or verify their identity.

“Government is committed to ending this deplorable practice to ensure citizens retain full access to their identification documents, which are essential for their livelihood and social participation. The confiscation of National Identity Cards as collateral is illegal, exploitative, and undermines our efforts to build an inclusive and secure society,” the Prime Minister emphasised.

She also added that vulnerable groups, including the poor, elderly, and uneducated, are disproportionately affected, often becoming targets of harassment and financial extortion when they fail to repay loans.

Nabbanja said that government has implemented several measures to address this issue, adding that existing laws, including Article 29(2)(c) of the Constitution and the Registration of Persons Act, prohibit the unauthorised possession or confiscation of National IDs.

She said violators can face fines of up to Shs960,000 or three years of imprisonment, while further enforcement is guided by the Tier 4 Microfinance Institutions and Money Lenders (Money Lenders) Regulations, which explicitly ban money lenders from using National IDs as collateral.

She added that in order to complement these legal protections, government is in the process of upgrading the current National IDs to Digital Identity Cards (E-IDs).

“The introduction of Electronic IDs will reduce dependence on physical cards for identification purposes. With digital verification, citizens will be able to authenticate their identity using electronic means,” she said.

The Prime Minister acknowledged that this solution might not immediately benefit citizens without access to smartphones or the internet but stressed that it represents a long-term strategy to eliminate the risk of physical ID misuse.

She also said that nationwide public awareness campaigns are also underway to educate citizens about their rights and the risks associated with surrendering their IDs as loan collateral.

She added that government has also intensified enforcement efforts to curb this practice as law enforcement agencies have been conducting operations to arrest violators and recover confiscated IDs, for instance, an operation in Lira City in August 2024 led to the recovery of 149 IDs.