Bank of Uganda has announced the liquidation, revocation of licence and order to wind up to EFC Uganda, a microfinance institution in the country.
In a statement on Friday morning, BoU said the decision was made in exercise of its powers under Sections 72 (1) and 12 (1) (d) & (g) of the Microfinance Deposit-taking Institutions (MDI) Act, 2003 as amended.
“Bank of Uganda (BoU) has effective today, January,19, 2024, placed EFC Uganda Limited under liquidation, revoked its license, and ordered for the winding up of its affairs,” BoU deputy governor, Michael Atingi-Ego said in the statement.
“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 undercapitalization and poor corporate governance.”
In October last year, EFC announced it was closing five of its business service centres including Kireka, Mukono, Nateete, Kalerwe and Nansana.
The financial institution said then that the decision was made as part of its efforts to streamline business.
EFC said its services would “seamlessly continue” through its cash handling branches at both Kamwokya Branch, on EFC House, Plot 45 Kira Road, Kamwokya, and Ndeeba Branch, on Master Wood Plaza, Masaka Road, Ndeeba.
“EFC appreciates the importance of accessible and convenient banking and is confident that these options will continue to provide its customers with the reliable service they have come to expect,” EFC said.
“EFC is committed to contributing to the development of the country’s private sector by providing increased access to financial services for the underserved Micro, Small, and Medium Entrepreneurs (MSMEs) market segment,” it added
However, the latest statement by the central bank shows that the financial institution was struggling, leading to its closure.
BoU however allayed fears of customers about losing their money, saying that together with the Deposit Protection Fund of Uganda, they 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. All borrowers of EFC Uganda Limited must continue to service their loan obligations by making payments at Bank of Uganda offices and branches.”
“Any person possessing property of EFC Uganda Limited should deliver it to Bank of Uganda and hand it over to the Office of the Director, Financial Stability. In accordance with Section 69 of the Act no steps may be taken by any person to enforce any security over the property of EFC Uganda Limited (MDI) and no other proceedings or execution of legal process may be commenced or continued against the institution or its property. “
