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The Bank of Uganda has taken decisive action by liquidating and revoking the license of Entrepreneurs Financial Center (EFC) Uganda, leading to its immediate closure. The move comes as a response to EFC’s failure to comply with market requirements, prompting concerns about the institution’s undercapitalization and poor corporate governance.
Michael Atingi-Ego, Deputy Governor of the Bank of Uganda, stated on Friday that the closure was necessary as EFC’s activities were deemed detrimental to the interests of its depositors. EFC Uganda, a microfinance deposit-taking institution (MDI), primarily focused on lending to small enterprises. It commenced operations in Uganda in June 2012 and was awarded an MDI banking license by the Bank of Uganda in November 2014.
As of December 2021, EFC reported assets amounting to Shs 112.8 billion, with shareholders’ equity at Shs 12.982 billion. Despite its initial promise, the institution faced challenges, leading to the drastic step taken by the Bank of Uganda.
Atingi-Ego announced that arrangements would be made by the Bank of Uganda and the Deposit Protection Fund to facilitate depositors in accessing their funds from EFC Uganda. He urged creditors to submit their claims within 30 days starting from January 19th, the closure date of EFC Uganda.
Furthermore, borrowers from EFC Uganda Limited are instructed to continue servicing their loan obligations by making payments at Bank of Uganda offices and other branches. Anyone in possession of property belonging to EFC Uganda Limited is directed to surrender it to the Office of the Director Financial Stability.
The Bank of Uganda emphasized that no individual should take steps to enforce any security over the property of EFC Uganda Limited (MDI), and no legal proceedings or execution of legal processes should be initiated or continued against the institution or its property.
This move follows the central bank’s intervention in the management of Crane Bank in October 2016, where it suspended the board and acting CEO due to the bank’s undercapitalization. The recent action against EFC Uganda reflects the regulatory commitment to safeguarding the interests of depositors and maintaining the stability of the financial sector.
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