In a decisive move, the Bank of Uganda (BoU) has exercised its powers under Sections 72 (1) and 12 (1) (d) & (g) of the Microfinance Deposit-taking Institutions (MDI) Act, 2003 as amended, officially placing Entrepreneurs Financial Centers (EFC) Uganda Limited under liquidation.
The central bank has also revoked EFC Uganda Limited’s license and ordered the winding up of its affairs, effective today, January 19, 2024.
The decision comes in response to the Bank of Uganda’s determination that the continued operation of EFC Uganda Limited poses a significant threat to the interests of its depositors. According to the Central Bank signed by Deputy Governor Atingi-Ego, the institution has been struggling with substantial undercapitalization and poor corporate governance, issues that have remained unresolved despite prior interventions.
In the wake of this development, the Bank of Uganda and the Deposit Protection Fund of Uganda will communicate the necessary arrangements to depositors, ensuring access to their funds. Meanwhile, all creditors are urged to submit their claims to the Office of the Director of Financial Stability at the Bank of Uganda within the next 30 days from the date of this statement.
While borrowers of EFC Uganda Limited are required to continue servicing their loan obligations, the payments should now be made at Bank of Uganda offices and branches.
Any individuals in possession of property belonging to EFC Uganda Limited are instructed to deliver it promptly to the Bank of Uganda, specifically to the Office of the Director, Financial Stability.
Furthermore, Section 69 of the Act prohibits any person from enforcing security over the property of EFC Uganda Limited (MDI). No other legal proceedings or execution of legal processes against the institution or its property may be initiated or continued, in accordance with this section.
For all inquiries regarding this development, the Central Bank has urged the interested parties to address their concerns to the Bank of Uganda. The central bank is also expected to provide further details on the unfolding situation and the steps being taken to safeguard the interests of depositors and creditors affected by the liquidation of EFC Uganda Limited.
The Financial institution currently facing challenges, initially established as Entrepreneurs Financial Center Limited, made its entry into Uganda in June 2012, setting up its inaugural branch in Ndeeba within the Lubaga Division of Kampala. In a pivotal development in November 2014, the Bank of Uganda bestowed upon EFCUL an MDI banking license, leading to its rebranding as EFC Uganda Limited.
By December 2021, EFCUL had amassed assets totaling Shs 112.8 billion, accompanied by a shareholders’ equity amounting to Shs 12.982 billion. During this period, the institution employed a workforce of 136 dedicated staff members. Specializing in catering to the financial needs of micro, medium, and small enterprises, EFCUL has been a key player in facilitating the growth of businesses in the region.
In a significant stride towards its mission, EFCUL secured a Shs 10 billion loan in December 2015, earmarked for the purpose of extending financial support to micro, small, and medium-sized businesses, further solidifying its commitment to fostering economic development within the community.
However, as per the Central Bank’s recent assessments, the once thriving and promising financial institution has encountered challenges in recent years, grappling with issues of undercapitalization and suboptimal governance.
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