The State Minister for Internal Affairs, David Muhoozi has revealed that the National Identification and Registration Authority (NIRA) is working on rolling out Digital Identity Cards (E-IDs) which will end the risk of physical ID confiscation as collateral in their transactions.
The Digital verification will allow citizens to authenticate their identity through electronic means, preventing money lenders from physically holding onto the cards.
“With digital verification, citizens will be able to authenticate their identity using electronic means, such as mobile apps or online platforms. This planned shift reduces the risk of physical IDs being used as collateral since digital identity verification does not require the physical handover of the card,” said Minister Muhoozi.
The Minister said that the use of national IDs as collateral for loans is a violation of citizens’ rights and a threat to national security.
“The confiscation of National Identity Cards as collateral for loans violates the rights and dignity of our citizens. This practice not only infringes on the rights of our people but also poses a serious threat to our national security and social stability,” said Minister Otafiire.
Many Ugandans, especially the poor and uneducated, have been left marginalized after losing access to their IDs. Without their IDs, citizens are unable to access essential services such as banking, healthcare, and even government welfare programs.
Muhoozi noted that the social and economic impact of this practice leaves borrowers vulnerable to exploitation, harassment, and financial extortion.
“When a National Identity Card is confiscated, it severely limits an individual’s ability to participate in basic livelihood activities. This practice disproportionately affects the most vulnerable in our society, leaving them trapped in cycles of poverty,” Muhoozi explained.
The government has also taken decisive steps to combat the illegal practice. These include legal provisions under the Registration of Persons Act and the Tier 4 Microfinance Institutions and Money Lenders Regulations of 2018, which strictly prohibit the use of national IDs as collateral. Under these laws, those found guilty of confiscating IDs face fines or imprisonment of up to three years.
In addition to legal measures, the government has launched public awareness campaigns aimed at educating citizens about their rights. Several arrests have already been made, and national identity cards recovered from money lenders in operations across the country. For example, in Lira City, 149 national IDs were recovered during a police operation in August 2024.
“We are working closely with law enforcement to ensure that anyone found guilty of this illegal practice is held accountable. Citizens are also encouraged to report any person or entity illegally holding their national IDs to the authorities,” said the Minister.
Muhoozi reiterated the government’s commitment to protecting its citizens and urged the public to refrain from surrendering their national IDs as collateral.
“The government is fully committed to ensuring that National Identity Cards remain in the possession of their rightful owners and are used only for their intended purpose. We will continue to engage stakeholders to find lasting solutions to this issue,” he said.
