Adlegal Uganda is set to embark on a comprehensive research initiative aimed at assessing the compliance of digital lending platforms with consumer protection regulations. The study, which will be completed by February 2025, will focus on evaluating how well online loan providers in Uganda adhere to the Digital Lending Guidelines 2024, established by the Uganda Microfinance Regulatory Authority (UMRA).

As digital lending continues to grow in Uganda, providing easy access to credit for many, it has also raised important concerns about transparency, fair practices, and the protection of consumer rights. Adlegal Uganda’s research will examine a range of key issues, ensuring that digital lenders uphold the rights of borrowers and maintain high standards of service.

Key aspects of the research will include assessing whether digital credit providers clearly disclose lending terms such as interest rates, fees, and repayment schedules; protect borrower data and obtain consent before sharing it with third parties; provide accessible and effective complaint resolution mechanisms; adhere to ethical debt collection practices and inform borrowers about recovery agents; avoid false or misleading advertising regarding loan terms and affiliations; and ensure compliance with guidelines when varying credit terms, including obtaining borrower consent before changes to charges, interest rates, or repayment terms.

Mr. Aziz Kitaka, the Executive Director of Adlegal Uganda, emphasized the significance of this initiative, saying:
“This study comes at a crucial time for Uganda’s digital lending sector. While the platforms have revolutionized access to credit, we must ensure they operate fairly, transparently, and securely. Our research will focus on areas critical to protecting consumers, including clear communication of loan terms, data privacy, complaint resolution, and responsible debt collection.”

Ms. Ayesigye Patience, Director of Consumer Advocacy at Adlegal Uganda, stressed the importance of addressing the challenges faced by consumers in the digital lending space:
“Consumers are often unaware of the hidden costs, unclear terms, and aggressive debt recovery practices that can occur in the digital lending sector. Our research will ensure that their voices are heard, and we can advocate for changes that guarantee fair treatment and financial security for all borrowers.”

Mr. Nicholas Murere, Director of Policy Advocacy, emphasized how the research findings will contribute to policy improvements: “Our research is not just about identifying non-compliance. We aim to shape a policy framework that encourages a balance between innovation and consumer protection. The recommendations we generate will help regulators, digital lenders, and policymakers strengthen the industry’s ethical standards and protect Ugandans from unfair lending practices.”

The findings of this research will provide critical insights into how digital lending platforms can enhance their compliance with consumer protection guidelines. Adlegal Uganda plans to share the final report with key stakeholders, including UMRA, digital lenders, and the public, to inform future regulatory efforts and foster a more transparent and responsible digital lending environment in Uganda.

With Adlegal Uganda at the forefront of this vital research, the study promises to play a key role in ensuring that Uganda’s digital credit industry evolves in a way that prioritizes consumer welfare and promotes sustainable financial inclusion.