Ugandan teachers cry out as loan firms defy interest rate limits.
Every day, across the West Nile Sub-region, desperate teachers seeking to borrow money throng financial institutions for loans. Some of these teachers have multiple loans. They are trapped in a vicious cycle of debt.
Financial institutions ask for security in the form of ATM cards, academic documents, and land agreements, although some teachers claim their money is deducted unfairly even after they have completed payments as per agreed terms.
One of the teachers at Teremunga Primary School, in Koboko Municipality, Mr Henry Adutia, claimed that he is expected to pay more than Shs10m by Premier Credit Financial Services after picking a loan of Shs900,000.
"I picked the Shs900,000 loan in 2017 and made a top-up of Shs600,000, and it increased to Shs1.5m in 2019, payable in a period of 70 months. They have been deducting Shs143,000 monthly. This is exploitation," he said on Tuesday.
Another teacher, Mr Henry Dramaza, a resident of Maracha District, who borrowed Shs2.9m from Bayport Financial Services Uganda in 2015, payable for a period of 60 months, said he ended up unfairly paying Shs10,650,000 million.
Some of the teachers said they are forced to borrow multiple loans because they have to take care of their families and dependants, which creates a big strain on their meagre finances.
The Uganda National Teachers Union Chairperson for Terego District, Mr Gabriel Eriku, said several financial institutions in West Nile exploit teachers.
He advised the teachers against borrowing multiple loans from financial institutions or money lenders to avoid such occurrences.
Recently, the Terego District Woman Member of Parliament, Ms Rose Obiga stormed the offices of Premier Credit Financial Services in Arua City to protest ''unfair treatment" of Mr Justine Inima, a teacher who claimed he was being cheated by the financial institution.
Mr Inima, who reportedly borrowed Shs1 million from the financial institution, alleged that officials of the financial institution claimed he still owed them money even after completing repaying the loan and accruing interest.
"These poor people are being cheated. I will drag you people before the Bank of Uganda and the Ministry of Finance to explain," Ms Obiga said.
The Koboko District Education Officer, Koboko, Mr Wayi Dragamulai, advised teachers to live within their means.
"Do not borrow the lifestyle of other people, and loans should be picked with focus and investment. It is not good to borrow loans for marriage purposes," he said.
In Obongi District, the Chief Administrative Officer, Mr Benson Otim, said: "We have got a problem with financial institutions that come to our civil servants, mainly teachers, to deceive them. Once the teachers get the money, the loan doesn't get completed. As a result, we don't see teachers in the classroom because they escape from loan officers."
Responses
When contacted for a comment, Bayport Financial Services Uganda official Francis Okalebo, said: "We do not speak to the media over the phone."
The loan officer of Premier Credit Financial Services in Arua City, Ms Brenda Angucia, said she was occupied with other activities and not ready to offer a statement about the matter.
"We are handling the matter and will get back to you later because I am still busy," Ms Angucia told Monitor. She had not responded to our reminders about the matter by press time.
The Micro Finance Institutions and the Moneylenders Act Cap 6, prescribe a maximum interest rate of 2.8 percent per month or 33.6 percent per annum on the principal or actual sum of money advanced to the borrower, according to the available legal notice by the Minister of Finance, Planning and Economic Development.
In July 2022, the government of Uganda implemented a 300 percent salary increase for science teachers. This boosted the gross monthly salary of a graduate science teacher from approximately Shs1.1 million to Shs4 million and that of a Grade V science teacher from approximately Shs796,000 to Shs2.5 million.
This policy created a significant pay gap with arts teachers, who did not receive a corresponding increase and earn a lower gross salary. Currently, arts teachers are on strike, demanding that their salaries be increased to correspond with that of their science counterparts
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