140 to lose jobs as BoU revokes EFC's licence

Business Edge Reporter 25th Jan, 2024 Financial Services Business Edge
140 to lose jobs as BoU revokes EFC's licence

EFC Offices


More than 140 employees of EFC Uganda Ltd, a microfinance deposit-taking institution, are sweating over their next move following a decision by Bank of Uganda to wind up the institution. The institution’s licence was revoked effective January 19, 2024.

“This action has been taken because Bank of Uganda has determined that the continuation of EFC Uganda Limited’s activities is detrimental to the interests of its depositors due to the institution’s failure to resolve its significant under-capitalization and poor corporate governance,” said Bank of Uganda Deputy Governor Michael Atingi-Ego.

By that action, the Central Bank effectively placed EFC under liquidation, revoked its license, and ordered for the winding up of its affairs.

  • In another development, the Central Bank and the Deposit Protection Fund have outlined procedures under which depositors would be refunded their money.

EFC launched operations in Uganda in 2012 as Entrepreneurs Financial Center Ltd, with the vision “to be the preferred financial services partner for micro and small entrepreneurs (MSEs) in Uganda.” Two years later, it was awarded an MDI license.

Its main shareholder was the Desjardins Group, a Canadian financial service cooperative, as well as other financers based in Belgium, Mauritius and the Netherlands.

  • Major donors in some of these countries were using EFC as a conduit for their financial support to Ugandan small and medium enterprises.

Before its closure, EFC was one of just four microfinance deposit taking institutions (MDIs) in the country. The three remaining are; Finca, Pride Microfinance and UGAFODE Microfinance.

The institution was holding customer deposits worth more than UGX50 billion, according to recent financial reports.

In a statement issued on January 24, the Bank of Uganda and the Deposit Protection Fund (DPF) announced how the depositors would be refunded their money.

The DPF is a Government agency that provides deposit insurance to depositors in Ugandan banks and MDIs to the tune of UGX10 million each.

  • Any amount in excess of UGX10 million is refunded by the Bank of Uganda.
  • “Depositors who have protected deposits of up to UGX100,000 will be paid using mobile money with effect from January 29, 2024 after verification of their NINs and mobile phone numbers. All other depositors with balances of up to UGX10 million will be paid effective February 5, 2024 through an agency bank to be communicated,” the press statement said.

It added: “BoU will inform depositors with more than UGX10 million of the arrangements for paying their deposits within 14 days from the date of this notice.”

Earlier, BoU advised EFC’s creditors to submit their claims to the Office of the Director Financial Stability at Bank of Uganda within 30 days.

Additionally, all EFC borrowers with outstanding loans and advances must continue to service their loan obligations by making payments at Bank of Uganda offices and branches, while any person or company holding EFC’s property was advised to hand it over to the Central Bank.

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