Uganda Bans Use of National IDs as Loan Collateral

The Ugandan government’s decision to ban the use of National Identification Cards as collateral for loans has received praise from commercial lawyers. They argue that this move is necessary as many citizens have had their IDs retained by money lenders, which can lead to various legal and identity-related issues. However, some Ugandans express disappointment, claiming that this directive infringes upon their rights as cardholders.

The National Identification Registration Authority (NIRA) issued a public document on September 13, 2023, advising the public to refrain from using National Identification Cards as security or collateral when seeking loans. NIRA emphasized that these cards are essential government-issued documents that serve as proof of identity and citizenship, and they cannot be retained by third parties.

Reports revealed that money lenders were requiring individuals seeking loans to provide their original National ID cards as security. This practice is now prohibited, leaving both Ugandans and money lenders facing uncertainties.

According to Steven Kalali, a commercial lawyer, this directive helps educate Ugandans about the legal implications of disposing of their National Identification Cards.

NIRA has also warned that individuals whose IDs have been withheld by money lenders often apply for replacements under the pretext of theft. Non-compliant Ugandans could face punishment in the near future as authorities work to enforce this directive.