In a move aimed at safeguarding the interests of depositors, the Bank of Uganda (BoU) has taken decisive action against EFC Uganda Limited, a microfinance deposit-taking institution (MDI). The central bank has placed EFC Uganda Limited under liquidation, revoked its license, and mandated the winding up of its operations in the country.
Michael Atingi-Ego, the deputy governor of the Bank of Uganda, explained that the decision to close EFC Uganda Limited was prompted by the microfinance institution’s significant undercapitalization and poor corporate governance. The Central Bank has determined that the continuation of EFC Uganda Limited’s activities poses a risk to the interests of its depositors.
Atingi-Ego stated in a Friday morning press release, “Bank of Uganda and the Deposit Protection Fund of Uganda will inform depositors of the arrangements that will be put in place to enable them to access all of their deposits. All other creditors are requested to submit their claims to the Office of the Director Financial Stability, Bank of Uganda within 30 days from the date of this statement.”
The deputy governor emphasized that borrowers of EFC Uganda Limited must continue servicing their loan obligations by making payments at Bank of Uganda offices and branches. Furthermore, individuals holding any property of EFC Uganda Limited are urged to deliver it to Bank of Uganda.
According to Section 69 of the Act, no steps can be taken to enforce any security over the property of EFC Uganda Limited (MDI), and no other legal proceedings or execution of legal processes may be initiated or continued against the institution or its property. Any inquiries regarding this matter should be directed to Bank of Uganda.
Background on EFC Uganda Limited:
EFC Uganda Limited, previously known as Entrepreneurs Financial Center Limited, commenced operations in Uganda in June 2012. The microfinance deposit-taking institution primarily focused on lending to small enterprises. In November 2014, EFCUL was granted an MDI banking license by the Bank of Uganda, officially adopting the name EFC Uganda Limited.
As of December 2021, EFC Uganda Limited boasted assets worth Shs112.8 billion, with shareholders’ equity amounting to Shs12.982 billion. The institution employed 136 staff at that time. Shareholders included Développement international Desjardins (DID), AfricInvest Financial Sector Limited (AFS), the Belgian Investment Company for Developing Countries (BIO), and Uganda Gatsby Trust.
Driven by its mission to offer financial services to Micro, Small, and Medium Enterprises (MSMEs) on a sustainable basis, EFC Uganda aimed to contribute to wealth creation and poverty reduction. The closure by the Bank of Uganda underscores the challenges faced by the institution and its impact on the financial landscape in Uganda.
