FRESH DEBATE OVER USE OF CUSTOMARY LAND FOR BANK LOANS

By Abraham Ekwaru, Communication Officer -Soroti

A fresh debate has emerged in the Teso sub-region over whether customary land should be accepted as collateral for bank loans, following the release of a new survey by the Land and Equity Movement in Uganda (LEMU) and its partners.

The findings were unveiled during a Regional Multi-Stakeholder Dialogue held at the Soroti District Lukiiko Council Hall on Friday, October 3, 2025.

The study revealed that despite the issuance of more than 8,000 Certificates of Customary Ownership (CCOs) and Land Inventory Protocols (LIPs) across the Teso and Lango sub-regions, families and clans remain deeply divided on using such land to secure credit from financial institutions.

According to LEMU Executive Director, Dr. Theresa Auma, many communities still view land as a collective heritage, not an individual asset, making it difficult for family members to agree on pledging it for loans.

“Consent from families and clans is not a mere formality but a safeguard deeply rooted in our traditions. Most families simply do not want to risk losing their land,” Dr. Auma said.

The survey shows that many households regard land registration mainly as a tool for strengthening ownership and reducing disputes, rather than for accessing credit.

Other obstacles include low demand for formal loans, limited financial awareness, distrust of banks, delays in documentation, and fear of losing land in case of loan default, especially due to crop failures or natural disasters.

Many communities instead rely on Village Savings and Loan Associations (VSLAs), which offer easier and more flexible access to small loans without risking family land.

Financial institutions also expressed reservations, citing unclear regulations from the Bank of Uganda (BoU) and the Uganda Microfinance Regulatory Authority (UMRA). They further pointed to family consent complexities, land disputes, and multiple ownership claims as major risks in extending credit on customary land.

Soroti Resident District Commissioner (RDC), Hajji Imran Muluga, advised communities to use land productively but with caution.

“Land is gold. But gold can either enrich you or ruin you, depending on how you use it. Let us use it wisely,” he said.

Muluga warned that reckless pledging of land could lead to loss of ancestral property. Cultural and local leaders echoed the call for responsible land management and the need to protect heritage through inclusive clan involvement.

Background

Customary land constitutes more than 70 percent of Uganda’s total landholding, with regions like Teso and Lango maintaining strong ancestral ownership systems.

While the issuance of CCOs and LIPs has improved land tenure security and reduced disputes, their use as collateral remains a contentious issue.

Experts warn that unless there is regulatory clarity, increased financial literacy, and community trust in banks, the question of whether customary land should be used to access credit will remain unresolved.