The Bank of Uganda has launched investigations into allegations that some mobile money users are losing money from their wallets to settle loans they never guaranteed, following complaints raised by Members of Parliament during a COSASE meeting.
Governor Michael Atingi Ego announced the probe while appearing before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises on Monday after lawmakers questioned the central bank over reports that digital lenders were recovering unpaid loans from people who had not consented to act as guarantors.
“You may recall the last time we interacted here, you raised this issue and I said we were not aware of it. But now that it has come to our information, we are going to investigate that matter and find out to what extent these entities that we supervise are involved in this,” Atingi Ego said.
He added that if investigations confirm that mobile money companies regulated by the central bank played a role in the transactions, appropriate action would be taken.
The issue was brought back to Parliament after MPs reported receiving complaints from people who claimed they discovered money had been deducted from their mobile money accounts to recover loans borrowed by other individuals.
COSASE Chairperson Muwadda Nkunyingi said some digital lenders allegedly listed people as guarantors without their knowledge before deducting money from their mobile money balances when borrowers defaulted.
“It was raised here that person A has a transaction with MTN or Airtel. In the process of recovery, these companies recover money from another person called B, whom they allege is a guarantor of A who has defaulted and whose account has no money. They recover the money from B’s mobile money balance, yet B is not aware of the transaction,” Nkunyingi said.
The allegations have raised concerns about consumer protection in Uganda’s rapidly growing digital lending market, where different regulators oversee different players.
Bank of Uganda supervises mobile money wallet providers, payment service operators and deposit taking institutions under the National Payment Systems Act, 2020, while standalone digital lenders fall under the Ministry of Finance’s regulatory framework.
Andrew Kawere, Director of National Payment Systems at the central bank, said investigations would examine the terms under which affected loans were issued before determining whether any guarantor relationship existed.
“Bank of Uganda will investigate that issue. But the investigation would be informed by facts, which include the terms under which the borrowing was picked and those terms will then explain the guarantor relationship,” Kawere said.
He also clarified that, based on the central bank’s current understanding, digital loans offered through institutions regulated by Bank of Uganda do not require guarantors.
“When it comes to the mobile money lending side, the companies we supervise are specifically MTN and Airtel, which offer digital wallets and work with lenders to extend credit to borrowers,” he said.
Lawmakers remained unconvinced, arguing that institutions licensed by the central bank should not escape accountability when consumers suffer losses through services operating on their platforms.
Lugazi Municipality MP Richard Senteza said the regulator had a duty to ensure licensed institutions complied with the conditions under which they were authorised to operate.
“If it is your role to put this institution into existence, then it should also be your role to ensure that its continued existence conforms to what you licensed it to do,” Senteza said.
The committee also questioned whether borrowers receive enough time to review loan agreements, whether loan terms are explained in languages they understand and whether some lenders impose excessive recovery charges.
The controversy comes as digital lending continues to expand rapidly across Uganda.
Bank of Uganda data shows digital loan disbursements more than doubled over the 12 months to June 2025, rising by 110.8 percent from Shs1.66 trillion to Shs3.5 trillion.
The wider mobile money ecosystem has also continued to grow, with electronic money transactions increasing by 28.6 percent to Shs326.3 trillion during the same period.
MTN Uganda alone processed Shs195.5 trillion in mobile money transactions in 2025 and reported about 14.7 million active mobile money users, highlighting the scale of digital financial services in the country.
As investigations begin, the central bank has advised affected customers to report complaints first to their mobile money providers before escalating unresolved cases directly to Bank of Uganda for further investigation.
Meanwhile, COSASE said it will also engage officials from the Finance Ministry’s digital lending regulator as Parliament seeks answers on how consumers can be protected from unauthorised loan recoveries.
