The study examined the impact of high interest rates charged by Pride Micro-Finance on the socio-economic development of communities in Nansana Branch, Uganda. The research adopted a mixed-methods approach, combining quantitative surveys of 150 borrowers and qualitative interviews with 15 key stakeholders. Results revealed that 68% of respondents reported difficulties in loan repayment due to high interest rates averaging 24-28% per annum. Statistical analysis showed a significant negative correlation (r = -0.67, p < 0.01) between interest rate levels and business profitability among borrowers. Additionally, 54% of clients indicated that high interest rates limited their ability to expand businesses, while 62% reported reduced household welfare expenditure to meet repayment obligations. The study concluded that while microfinance served as a vital financial inclusion tool, excessively high interest rates undermined the socio-economic advancement of beneficiary communities by constraining business growth, reducing disposable income, and increasing financial stress. The research recommended that Pride Micro- Finance review its interest rate structure, implement flexible repayment schemes, enhance financial literacy programs, and advocate for regulatory interventions to establish interest rate caps that balance institutional sustainability with community development objectives.