Efc Annual Report 2021 Version4

ANNUAL
REPORT
2021
Annual Report I 2021
Table of Contents
Acronyms 03
About our Integrated Report 04

Who we are 05
Our Vision and Mission 06
Our Values 07
Strategic Partnerships 08
About EFC Uganda 09

Banking Presence in Uganda 10
Banking Products and Services 11
Value Proposition 15
Key Differentiators 15
Organisational Overview 16
Financial definitions 17
Highlights of 2021 performance 18
Financial Position 19
Financial Performance 21
Board Chairman’s statement 22
Managing Director’s Statement 24
Management Team 26
Board Members 40
Situational Analysis & External Environment 60
Macro-Economics in Play 64
How we create value ( Customer Success Stories) 68
Pages 02
ABBREVIATIONS &
FINANCIAL DEFINITIONS:
AGM Annual General Meeting
AML Anti-Money Laundering
ALCO Asset - Liability Committee

BCP Business Continuity Planning
BOU Bank of Uganda (Central Bank)
CAR Capital Adequacy Ratios

CSR Corporate Social Responsibility
ECL Expected Credit Loss
EFC Entrepreneurs Financial Centre
EXCO Executive Committee
HIL Home Improvement Loans

IAS International Accounting Standards
IFRS International Financial Reporting Standards
KPI Key Performance Indicators

MDI Microfinance Deposit Taking Institution
MSME Micro, Small and Medium Enterprises
NPLs Non-Performing Loans
PAT Profit After Tax

SME Small and Medium-sized Enterprises Loans
WMT Women Market Traders Loan
Pages 03
ABOUT OUR
INTEGRATED
REPORT
This Annual Report is a formal publication
of EFC Uganda Limited (MDI) and all rights
are reserved. In compilation of this report,
EFC has used its best endeavors to ensure
both financial and non-financial information
is correct and current at the time of publication.
It is intended to provide our stakeholders
with information about us, our vision, core
values, our products, testimonials from our
clients, performance, corporate governance,
strategy, and outlook for 2022.
Pages 04
WHO
WE ARE
EFC Uganda Limited (MDI), is among the fastest growing
microfinance institutions in Uganda licensed and supervised
by the Bank of Uganda. We are 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.
Pages 05
VISION
MISSION
To be the preferred To partner with MSMEs

financial services and increase access
partner for micro, to specialized financial
small and medium services on a permanent
entrepreneurs basis while contributing
(MSMEs) in Uganda. to wealth creation,
improvement of people’s
living conditions and
development of Uganda’s
private sector.
Pages 06
OUR
VALUES
We uphold a reputation for integrity as an entity in which
customers, business partners, communities and government
authorities have placed their trust. The EFC, it’s Directors,
Senior Management and Employees adhere to strict and
rigorous standards which are designed to further protect the
interests of its customers and stakeholders, and ensure that its
decisions and actions reflect the following values:
Compliance with the laws and rules in effect;
Compliance with ethical and professional rules of conduct;
Compliance with national and international standards and
practices for accounting and financial information;
Respect for microfinance best practices;
Transparency in all aspects of its business;
Social responsibility and consumer protection relative to all
EFC products and services;
Independence in the appointment of Directors and their
decision making (i.e. democratic action).
Pages 07
STRATEGIC PARTNERS Annual Report I 2021
Développement International Desjardins (DID)

DID is a subsidiary of the Desjardins Group, the leading cooperative financial
group in Canada and fifth largest in the world, with over 7.5 million members
and clients, and assets worth over US$ 397.1 Billion. Founded in 1900, today
Desjardins Group is counted among the world’s strongest banks according to
The Banker magazine. For 48 years, DID has been working to develop the
inclusive finance sector in developing and emerging countries. DID targets
increased access to diversified and secure financial services for all and the
development of individual and collective wealth. www.did.qc.ca/en
AfricInvest Financial Sector Limited

AfricInvest is a pan African Private Equity Fund Manager founded in 1994
with currently over USD 1.9 Billion in funds raised. AfricInvest is uniquely
positioned as one of the most experienced private equity investors on the
continent. AfricInvest has dedicated investment teams focused on North
Africa and SubSaharan Africa, and employs over 80 professionals in 10
offices. The teams benefit from strong, long-term support from both local
and international investors, including leading development finance
institutions worldwide. Since 1994, AfricInvest has invested in 165 companies
across 26 African countries in a variety of high growth sectors.
Uganda Gatsby Trust (UGT)

was founded in 1994 through a partnership between the Gatsby Charitable
Foundation (GCF) UK and the Faculty of Technology of Makerere University
in Kampala. Its original idea was to support manufacturing and value adding
businesses with consultancy services to micro, small and medium
entrepreneurs (MSMEs) and by linking final-year students at Makerere’s
Faculty of Technology with MSMEs. UGT’s current focus is to promote
linkages with Makerere University as well as promote the academically
gifted but challenged students through scholarships in disciplines that
promote skills for self-employment and/or employability.
www.gatsby.org.uk/africa/ programmes/uganda-gatsby-trust
Belgian Investment Company for Developing Countries

(BIO) BIO supports private sector growth in developing and emerging
countries by funding financial institutions, enterprises and infrastructure
projects that are privately held. With equity capital of around 1.052 Billion
Euros, BIO provides tailored long-term financial products directly or through
intermediaries. For clients, BIO also provides subsidies for technical
assistance programs as well as feasibility studies to enhance business
performance and strengthen the impact on sustainable development.
BIO supports projects with a balance between return on investment and
development impact. www.bio-invest.be
Pages 08
Pages 09
ABOUT
EFC UGANDA
Banking Presence in Uganda
EFC is among the fastest growing Licensed Microfinance
Institutions in Uganda. It currently operates in Kampala, with a
Head Office in Kamwokya, 2 branches at Acacia Place, Ndeeba
and 5 business services centers (BSCs) at Mukono, Nansana,
Kalerwe, Kireka and Nateete. All of them have shown
tremendous growth over the years and remain top notch
solutions providers to our customers.
Pages 10
BANKING PRODUCTS Annual Report I 2021
AND SERVICES
Premium Savings
No monthly charges
High and competitive interest rates and it is
designed for target savers.
Regular Savings
Unlimited deposits and withdrawals suitable for dynamic
entrepreneurs.
Term Deposits
High and competitive interest rates ideal for savers with
long term investment plans
Pages 11
Loan Products
Business Loan
Our business loans finance a wide range
of activities including working capital,
equipment purchases, investments
and agricultural supplies among others.
Pages 12
Home Improvement Loans
Efficient housing loan services

structured to fit entrepreneurs
home improvements
Pages 13
Women Market Trader Loans
Quick small loans ranging from

5M to 15M especially designed
for women entrepreneurs
Pages 14
EFC VALUE PROPOSITION;

1 3
2
The The
fastest The solution
way to fastest to your
get a loan loan money
process problems
4
Your
solution
to grow
your
business
Key Differentiators
EFC’s key differentiators from the competitors are turnaround time and
excellent customer service.
Our clients are able to walk into our branches and get a service
in the shortest time possible.
This is usually 2 to 5 days maximum depending on the securities pledged

as collateral.
Pages 15
ORGANISATIONAL
OVERVIEW
Pages 16
FINANCIAL DEFINITIONS
Annual statement of comprehensive income

Profit for the Year profit attributable to ordinary shareholders.
Operating expenses as a percentage of

Cost to Income Ratio
business income
Permanent shareholder equity in the form of

issued and fully paid-up shares plus all
Core Capital
disclosed reserves, less goodwill, or any other
intangible assets
Supplementary capital General provisions

which are held against future and current
unidentified losses that are freely available to
Supplementary
Capital meet losses which subsequently materializes,
and any other form of capital as may be
determined from time to time by Bank of
Uganda
The sum of core capital and supplementary

Total Capital
capital
Core Capital Ratio Core capital divided by the total risk weighted
assets
Total Capital Adequancy Total capital divided by the total risk weighted
Ratio assets
Pages 17
HIGHLIGHTS
OF 2021 PERFORMANCE
General performance of the Despite the above as well as the

institution dipped in 2021 when precarious economic conditions
compared to 2020 and 2019. This EFC managed to grow its Balance
decline was mainly due to a shrunk sheet in 2021 driven by strong
loan portfolio as well as the growth in customer deposits as
ensuing deterioration in portfolio well as a capital injection in August
quality orchestrated by the effects 2021.
of the Covid-19 pandemic on the
businesses of our clients. Costs were within control with
benefits from initiatives to better
EFC’s niche market (Micro, Small execute and efficiently serve our
and Medium Enterprises) bore the customers.
brunt of the two lockdowns and
thus greatly affected their ability The following are the highlights of
to fulfill their loan obligations; this the 2021 performance
is despite the Central Bank’s
intervention through the Covid 19
relief program on sectors severely
affected by the pandemic.
Pages 18
FINANCIAL POSITION
TOTAL ASSETS:
TOTAL ASSETS: EFC Uganda’s balance sheet grew from Ushs 87.2
87% Shs 101.4 bn billion in 2020 to Ushs 101.4 billion in 2021 reflecting a 16.29%
growth mainly on account of growth in customer deposits and
2020: a capital injection in August 2021.
16.29% Shs 87.2 bn Earning assets made up 87.01% of total assets at end of 2021.
CUSTOMER DEPOSITS:
CUSTOMER DEPOSITS: grew by 95.8% in 2021 from Ushs 40.0 billion in

95.8% Shs 78.3 bn 2020 to Ushs 78.3 billion at close of 2021. Growth in customer deposits
was attributed to growth in Term deposits dominated by institutional
2020:
depositors.
Shs 40.0 bn
NET LOANS AND ADVANCES: went down year on year by 26.4% to close
NET LOANS AND ADVANCES:
2021 with a net portfolio of UGX 42.6 billion from UGX 57.9 billion at close
of 2020. The decline is attributed to the effects of the Covid-19 pandemic
26.4% Shs 42.6 bn on the businesses of our clients. The lockdown of the economy experienced
in 2021 as well as travel restrictions instituted by our trading partner
2020:
26.4% countries significantly affected customers’ businesses especially our niche
Shs 57.9 bn
market.
TOTAL EQUITY:
TOTAL EQUITY: went down year on year by 2.8% to close 2021 with a
2.8% Shs 12.05 bn total equity of Ushs 12.05 billion from Ushs 12.40 billion at close of 2020.
The dip in equity levels is a result of the 2021 net loss, ensuing from a
2020: declining portfolio as well as deterioration in portfolio quality.
2.8% Shs 12.40 bn
NET LOANS TO TOTAL ASSETS:
NET LOANS TO TOTAL ASSETS: the ratio went down to 42% in 2021
42% 42% from 66% in 2020 as the loan portfolio shrunk coupled with deterioration
in portfolio quality in 2021.
2020:
66%
TOTAL DEPOSITS TO TOTAL ASSETS: The ratio remarkably went up to

TOTAL DEPOSITS TO TOTAL ASSETS:
77% courtesy of a substantial growth in customer deposits (95.8%) in 2021.

95.8% 95.8% Growth in customers deposits unequivocally had a knock on effect on
other Balance sheet lines on the Assets side notably investments that grew
2020:
by 364% in 2021.
77%
Pages 19
EQUITY TO TOTAL ASSETS: EQUITY TO TOTAL ASSETS: The ratio declined to 12% in 2021 from 14%
in 2020 as a result of growth in total assets as well as the impact of the
12% 12% 2021 net loss. It’s also noteworthy that EFC received a capital injection in
August 2021 that boosted the equity levels as well as total assets, however
2020: deterioration in portfolio quality occasioned by the Covid-19 pandemic
14% undesirably negatively affected the equity levels.
Total Assets (UGX Billions)

100 120%
90 100%
80
80%
70
60 60%
50 40%
40 20%
30
0%
20
10 -20%
0 -40%
2019 2020 2021
Total Assets (UGX - Billions) CAGR
Customer Deposits (UGX Billion)

45 100%
40 90%
35 80%
30 70%
25 60%
20 50%
15 40%
10 30%
5 20%
0 0%
2019 2020 2021
Customer Deposits (UGX - Billions) CAGR
Net Loans & Advances ( UGX Billions)

70 100%
60 80%
50 60%
40 40%
30 20%
20 0%
10 -20%
0 -40%
2019 2020 2021
Net Loans and Advances (UGX - Billions) CAGR
Pages 20
FINANCIAL PERFORMANCE
Profitability:
EFC closed with a net loss of Ushs 6.62 billion for FY 2021 down from a Profit
After Tax of Ushs 2.4 billion for FY 2020. Profitability for 2021 was mainly affected
by lower interest income in 2021 occasioned by a shrunk portfolio; this, combined
with a bigger impairment charge in 2021 resulting from deterioration in portfolio
quality.
Return on Average Equity:

declined to -55% in 2021 from a positive 20% in 2020 and 6% in 2019 owing to
the 2021 net loss position.
Return on Average Assets:

declined to -7% in 2021 from a positive 3% in 2020 and 1% in 2019 owing to
the 2021 net loss position.
Cost to Income Ratio (Excluding Loan Loss Provision Expense):

went up to 131% in 2021 from 70% in 2020 owing to a decline in revenue lines
especially Interest Income that went down by 14% (Ushs 2.4 billion) in 2021 as
well as an increase in Administration expenses attributed to ECL adjust-
ments (BOU impairment adjusted for IFRS 9 impairment expenses).
Cost to Income Ratio (Including Loan Loss Provision Expense):

went up to 157% in 2021 from 82% in 2020 owing to deterioration in portfolio
quality in 2021. The Covid-19 pandemic greatly affected our clients’ business’
thus constricting their ability to service their loan obligations.
Pages 21
BOARD
CHAIRPERSON’S
MESSAGE 2021
It is my pleasure to present EFC’s Annual

Report for the year ended 31 December 2021.
Overview
The Financial Year 2021 was quite a difficult one for

everyone and most especially our SME customers as
we know that these, globally, took the full brunt of the
pandemic.
At EFC, our exposure to the education, entertainment,

and tourism sectors together with their attendant
value chains meant that we had very minimal loan
repayments (cashflows) coming through from these
sectors for close to 2 years. We therefore prudently
provided for in the books of accounts for the same.
Nonetheless, schools were reopened in January 2022,
and we are hopeful for a gradual rise in the
performance of this sector together with the other
sectors since the economy has now been fully opened.
We are glad to report that in August 2021, our

shareholders injected additional equity to the tune of
UGX6.2 billion which helped create an additional buffer
for our capital ratios.
The Ministry of Finance reported that the economy

shrunk by about 1.5% in 2021 largely due to the
pandemic. However, despite the challenging economic
times, we continued to grow our business and
registered 100% growth in customer deposits, and thus
strengthening our liquidity and market share position in
Charles W. Nalyaali the MDI industry. We are committed to building a
Chairperson successful and sustainable financial institution we can
all be proud of.
Pages 22
FINANCIAL
PERFORMANCE
FOR FY2021
I commend the team for having doubled
customer deposits from UGX38 billion to
Outlook for 2022 and
UGX78 billion as of 31st December 2021. Beyond
During the year our total paid up capital
increased to UGX30.5 billion because of
the additional capital received to the We believe that we have put 2021 and all
tune of UGX6.2 billion. However, our its challenges firmly behind and looking
profitability was greatly impacted by the forward to a much-improved EFC for
deterioration in the loan portfolio quality 2022 and beyond.
largely due to our exposure to the
schools and entertainment sectors as Appreciation
mentioned prior. This was further
exacerbated by the substantial I take this opportunity to thank my
slowdown in lending activities during the colleagues on the Board for their
year coupled with the mid-year total invaluable contribution in steering and
lockdown of June/July 2021. As a result of providing oversight of the activities of our
these factors, we did not register any company.
growth in our loan portfolio, a key earning
asset and hence saw reduced revenues I would also like to thank our customers,
for the year. We therefore reported a Net shareholders, regulators, and all other
loss for the year of UGX6.6 billion. stakeholders for their contribution
towards making EFC a more robust
Corporate Governance organization
The Board continued to steer the On behalf of the Board, I congratulate

embodiment of good governance the Managing Director, the Senior
principles and practices through the Management team, and the entire EFC
entrenchment of a value driven staff for holding fort during 2021. I am
corporate governance culture looking forward to working together with
throughout the organization. The Board each one of you as we create Uganda’s
operates with 3 committees and one most preferred SME bank.
sub-committee: Risk Asset & Liability
Committee (RALCo), Human Resources &
Compensation Committee (HRCC) and
the Board Audit Committee (BAC). All the
board committees met regularly as per
plan and were properly attended.
Pages 23
MANAGING
DIRECTOR’S
STATEMENT
2021 was a very difficult year for not
only our customers but the company
as well. As we are all brazenly aware,
the MSMEs, our niche market took the
brunt of the pandemic. Our business
being a bell weather for the SME
market, we were not spared from the
impact. However, I am glad to report
that in spite of the significant punches
we took in the year 2021, our business
stayed afloat and barring any
catastrophes in 2022 should return to
normal in the near term. The growth we
witnessed in 2021, albeit muted is
significant testament to the resilience
of our business now and in the future.
From a financial performance longest in the world and that carried be tough to put in a good year.
perspective in spite of the significant knock-on effects on our business During the year, we also froze further
provisioning for our loan book, we including the value chain around interest accumulation on the
still grew our customer deposits both the education and education sector portfolio which
substantially; a trend of liquidity tourism/entertainment sectors. We indeed was a significant hit on our
that we saw across the market. are therefore glad to put 2021 behind revenue but a significant investment
While we are reporting a substantial us. in Uganda’s future human capital.
loss; this is also attributable to our We are glad that many of those
prudence in adequately provisioning, The net loss for the year at UGX 7.7 schools have since reopened in
especially for the school portfolio Billion while significant is largely a 2022. On the brighter side, customer
which accounted for nearly 12% of reflection of the challenges of the deposits more than doubled closing
our loan book. pandemic all through year the year at a respectable UGX80
compounded by the mid-year Billion up from UGX40 billion for
At nearly 2 years, Uganda’s lockdown lockdown in June and July of 2021. 2020. With this, we grew our market
of schools has possibly been the With that, it was always going to share from 10.9% to 20.36%
Pages 24
16
Outlook for 2022

Because of the pandemic and its effects pandemic. That we survived 2021 is true
on capital adequacy we had to freeze a testament to the commitment of our
lot of the planned capital investments in people, our shareholders, and our
the year as we concentrated more on customers in ensuring the continued
stabilising our business given the sustenance of our organisation.
uncertainties all throughout the year. We
are grateful to our shareholders who Now that 2021 is behind us, we are seeing
injected at additional UGX6.2 Billion in green shoots in our business and will be
August which helped absorb the impact making the investments necessary to
of the Covid-19 pandemic. Lending grow our business. In the late 2020 we
operations were mostly on hold for most invested in a robust new core banking
of the year hence the lack of growth in system, and we shall continue to digitise
our loan portfolio. our institution on the backbone of that
prior investment. We are looking to land
We believe that our business has digital products in the near future as we
demonstrated an unprecedented level continue to focus on improving the
of resilience given that MSMEs were at customer experience and making EFC a
the forefront of the impact of the more customer centric institution.
Thank you,
Shem Kakembo
Managing Director
Pages 25
THE
MANAGEMENT TEAM
Pages 26
Shem
Edmond
Kakembo
Managing Director
Shem is an experienced banker who joined EFC from one

of Uganda’s largest commercial banks where he served as
Head of Personal Markets (Retail) and Head of Customer
Channels at the same Bank.
He is recognised for having pioneered both digitization

and Agent banking at the same bank.
Pages 27
Denis
Kibuka
Musoke
Executive Director
Pages 28
Gerald
Ssevumme
Chief Finance
Officer
Pages 29
Sylvia
Stellah
Tamale
Head Marketing and
Customer Experience
Sylvia Stellah has over 10 years work experience in the

financial services industry. She holds a Bachelor of Arts
Degree in Management from Bhopal (Barkatullah)
University and a Postgraduate Diploma in Financial
Management, from India. Prior to joining the EFC team in
2015, Sylvia worked as a Country Operations Manager for
another microfinance institution in Uganda. She has good
expertise in the fields of people and process
management, distribution, sales generation and business
development gained through the various stages of her
career.
Pages 30
Michael
Davis Agaba
Head MIS and
Analytics
Michael is a seasoned banker with over 12 years

experience. Prior to his appointment at EFC, Michael
worked with a renowned commercial bank as a Credit
Portfolio Manager where he was responsible for a
portfolio of over USD 800mn. He champions healthy
credit portfolio management to avert potential losses.
Pages 31
Faisal
Kasujja
Chief Information
Officer
Faisal is a certified information systems security

professional with extensive experience in managing
project deliverables with quality and efficiency within
high-profile organisations. He has the ability to plan
resources for user requirements and design functional
specifications. Kasujja is proficient in redesigning software
deployments to cut operational expenditure license costs.
He is an expert in managing
IT infrastructure, from design to Implementation.
Pages 32
Shamim
Nambuusi
Head Legal &
Compliance
Shamim joined EFC from a Commercial Bank

where she was holding a similar role. She has over
9 years experience in the banking industry. Shamim
is an advocate of the High Court of Uganda,
a Member of the East African Law Society and the
Institute of Chartered Secretaries and Administrators
(ICSA-UK).
Pages 33
John
Stephen
Mugerwa
Finance
Manager
Stephen joined EFC in January 2020 as the Finance Lead

on the Core Banking Software Implementation Project
and later joined the Finance team as the Finance
Manager. He has a wealth of practical experience in
Accounting, Finance, Risk Management, Project
Management, Credit Management, Micro-finance,
Banking, Operations and Strategic Leadership spanning
over 20 years. Before joining EFC, Stephen worked with a
number of financial institutions in senior positions mostly
in the finance domain.
Pages 34
Flavia
Kizza
Head Distribution
Flavia is an experienced banker with over 12 years’

banking experience. Since joining EFC in 2018, Flavia has
served as Manager Enterprise Banking, Portfolio Growth
Manager and is currently Head of Distribution. She has
previously worked with a leading microfinance company
and two commercial banks in roles covering client
relationship management, credit administration and loan
recovery management.
Pages 35
Sophie
Nakazibwe
Chief Risk Officer
Sophie is a seasoned Risk Management Professional with

over 10 years’ global experience, with leading
international firms, providing risk management oversight,
business process engineering, compliance and internal
control. Adept in partnering with business and process
owners in increasing awareness and understanding of
business risks, driving process improvement and enabling
business sustainability and transformation. Sophie Joined
EFC from a commercial bank where she had been Risk
Manager. Prior to that, she was Head of Financial Crime
Control where she successfully provided oversight over
the planning and implementation of
a robust risk management and fraud investigation
framework that reduced fraud losses by over 80%.
Pages 36
Suzan
Nampala
Kirule
Chief Human
Resource Officer
Susan is the Chief Human Resource Officer.

She is a Human Resource generalist whose work
experience is in the Public Service, Manufacturing ad Oil
and gas sectors. Susan a certified coach and a member
of the Human Resource Managers Association of Uganda
and the International Coaching Federation.
Pages 37
Irene
Nampeera
Mutinye
Head of Credit
Irene is an experienced credit risk specialist with over

20 years’ experience in Financial services sector with
15 years in Credit risk management in Commercial
banking and 6 years in Microfinance. She joined EFC from
one of the Local banks where she had been a Head of
Credit approval. Has previously worked as a Head of
Credit, Head of Credit Analysis with other Local Banks
where she effectively built proficient systems that
ensured that the Bank’s Credit policies were adhered to.
Ms. Irene Nampeera Mutinye holds a Master’s Degree in

Accounting and Finance and a Bachelor of Commerce
Degree in Finance from Makerere University with various
certifications in banking.
Pages 38
Racheal
Kobwesigye
Head of Internal
Audit
Racheal is currently the Head of Internal Audit, an independent function

whose primary role is to help the Board and Executive Management to
protect the assets, reputation and sustainability of EFC. In this role she
provides leadership to the Internal Audit team to enable the function
effectively provide assurance to stakeholders and support EFC in achieving its
short and long term goals and objectives.
Racheal Kobwesigye joined EFC in September 2021 as Chief Internal Auditor
from another commercial bank where she held the same role.
She has over 9 years of experience in Risk Management, Internal Audit and
External Audit in the Financial Services space. She has handled assignments
in Uganda and other African countries including Rwanda, Liberia and Sierra
Leon
She holds a Bachelor’s degree in Commerce (Accounting) from Makerere
University, is a member to both the Association of Chartered Certified
Accountants, UK(ACCA) and the Institute of Certified Public Accountants of
Uganda (ICPAU), currently pursuing a Master’s in Business Administration from
Edinburgh University.
Pages 39
BOARD MEMBERS
Charles W. Nalyaali Stevens Mwanje Shem Kakembo

Board Chairperson Vice Chairperson Managing Director
21st May 2015 8th October 2018 5th June 2018
Julius Tichelaar Alexis Losseau Florence Bamwine

Board Member Board Member Board Member
21st May 2015 26th June 2017 17th January 2019
Brent Wilson Bruno Degoy

Board Member Board Member
21st March 2018 28th November 2018
Pages 40
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
Pages 41
DIRECTORS' REPORT
The directors submit their report together with the audited financial
statements for the year ended 31 December 2021, which disclose the state
of affairs of EFC Uganda Limited (MDI) (the “Company”).
1. Principal Activities 0.248 and 184,211 million Class B ordinary

The activity of the Company continues shares with a nominal value UGX 0.081
to be that of providing financial services per share).
to entrepreneurs, micro, small and
medium enterprises in Uganda on a 6. Financial Risk Management
permanent and sustainable basis while Objectives and Procedures
contributing to wealth creation and The Company’s activities expose it to
poverty reduction. a variety of financial risks including
credit, liquidity, and market risks. The
2. Results company's overall risk management
The results of the Company for the year policies are set out by the board and
ended 31 December 2021 are set out implemented by management. These
on page 13. policies involve analysis, evaluation,
acceptance and management of some
3. Dividend degree of risk or a combination of risks.
The directors do not recommend the These risk management objectives and
payment of a dividend for the year policies are outlined in detail under
(2020: Nil). note 4 in the financial statements.
4. Directors 7. Corporate
The directors who held office at the governance
date of this report are shown on page The Board of directors consists of eight
1. (8) directors. The Board of directors
consists of eight (8) directors. One of
5. Share Capital the directors, Mr. Shem Edmond Kakembo
The authorized & issued share capital holds an executive position (Managing
is UGX 47,631 million (2020: UGX 30,196.1 Director) in the company as it is a
million) and paid-up share capital is requirement by Bank of Uganda. The
UGX 30,539 million (2020: UGX 24,263.6 Board takes overall responsibility for
million) comprising 176,835 million ordinary the company, including responsibility
shares with a nominal value of UGX for identifying key risk areas, considering,
0.1727 per share (2020: UGX 10,575 million and monitoring investment decisions,
ordinary shares with a nominal value considering significant financial matters,
of UGX 1,18,951.6 million Class A Ordinary and reviewing the performance of
shares with a nominal value of UGX management, business plans and
Pages 42
budgets. The Board is also responsible operational activities, acting as a
for ensuring that a comprehensive medium of communication and
system of internal control policies and coordination between all the
procedures is operating effectively, and stakeholders.
for compliance with sound corporate
governance principles. 8. Board Committees
To ensure effectiveness, the Board set
The Board is required to meet at least up various committees which operate
four times a year. The Board delegates within and in accordance with clearly
the day-to-day management of business set terms of reference. The committees
operations to the Managing Director report to the Board at periodic intervals
who is assisted by senior management. and by circulation.
The audit committee facilitates the These committees include the following;
effective control of all the company's
8.1 Board Audit Committee (BAC)
The BAC sits on a quarterly basis and its mandate includes the following;
a) Monitoring the financial reporting process, its output and the integrity of the
Company’s financial statements including any formal announcements relating
to the company's financial performance;
b) Monitoring and reviewing the effectiveness of the Company's internal audit
function while ensuring that the internal audit function maintains open
communication with senior management, external auditors, the supervisory
authority, and the Audit Committee;
c) Recommending to the board or shareholders for their approval, the remuneration
and terms of engagement of the external audit firm; and
d) Ensuring that the Company has identified the major risks it faces and has
established procedures and practices necessary for optimal control of these
risks.
The committee comprises the following members:
Stevens Mwanje Florence Bamwine

Chairperson Member
Pages 43
8.2 Human Resource & Compensation Committee (HRCC)
The HRCC seats on a quarterly basis and it's mandated to;

a) Ensure that EFC's human resources management function and activities are
adequate and effective;
b) Provide strategic oversight and governance relevant to the adequacy and
effectiveness of the HR management, organizational structure and function of
the company; Review all existing HR policies while ensuring that there are
adequate policies additions being considered for guidance and Board approval;
c) Review, monitor and, if advisable, make recommendations for Board approval
on the Company’s performance evaluation and compensation parameters as
deemed appropriate and in the best interests of the company, including remedial
actions in case of unsatisfactory evaluations and with due consideration to
the company's performance, shareholder return and competitive benchmarks;
and
d) Annually review the Company's management succession plans and
contingency preparedness.
The committee constitutes of the following members:
Florence Bamwine Julius Tichelaar

Chairperson Member
Alexis Losseau Brent Wilson

Member Member
Pages 44
8.3 Risk, Assets and Liabilities Committee (RALCO)
The RALCO seats on a quarterly basis and it's mandated to;
a) Establish and oversee the overall asset and liability strategies including risk
limits, tolerance and/or appetite and recommending asset and liability
management policies and procedural guidelines;
b) Ensure the risk limits, policies and procedural guidelines adequately provide for
the identification, measurement, monitoring and control of risks inherent in
investment and liquidity management decisions;
c) Review and oversee management of changes to the EFC’s balance sheet,
including structural changes and achievement of strategic objectives in relation
to growth or shrinkage;
d) Monitor the aggregate level of compliance with risk limits;
e) Recommend types of products and treasury instruments with an appropriate
duration and interest rate to manage the overall balance sheet structure; and
Oversee the treasury function relative to implementation of the duly approved
f) strategies, limits and procedures relating to all key risks inherent in the company’s
financial activities.
Julius Tichelaar Brent Wilson

Chairperson Member
Alexis Losseau Bruno Degoy

Member Member
Pages 45
8.4 Board Transformation Committee
The Transformation Committee is a sub- committee of RALCO. Its mandate

is to provide;
a) Oversight over the upgrade of the Institution’s License and transform into
a tier 2 bank; and
b) Review, Monitor and if advisable make recommendations to the board on

the various activities required to achieve the 2 transformational projects.
Julius Tichelaar
Chairperson
Alexis Losseau
Member
Shem Kakembo
Member/Secretary
Pages 46
DIRECTORS' REPORT
(CONTINUED)
9. Board Evaluation 11. Independent Auditors
The Board evaluation and The Company's auditors, BDO East
independence assessments for the Africa, Certified Public Accountants
period ended 31 December 2021 were of Uganda, will not seek
conducted by the Institute of reappointment, having completed
Corporate Governance Uganda. the three (3) years of continuous
Thereafter, a feedback session was service as stipulated in Section 34 of
organized wherein the report was the Micro Finance Deposit-Taking
thoroughly discussed. Institutions Act, 2003.
One on one meetings were also
organized for the Board Chairperson 12. Approval of Financial
with each individual director to Statements
discuss the peer evaluation results. The financial statements were
approved at a meeting of the board
10. Management Committees of directors held on
For effective delegation the
Managing Director also set up various
committees made up of senior
management entrusted with
different responsibilities which
BY ORDER OF THE BOARD
operate within prescribed Terms of
Reference. These Committees include
Executive Committee (EXCO),
Management Asset and Liabilities
SECRETARY
Committee (MALCO), Credit Risk
Management Committee (CRMC),
Date:………………………………………
Management Risk Committee (MRC)
and Procurement Committee. The
committee meetings are held on a
monthly basis.
Pages 47
STATEMENT OF DIRECTORS'
RESPONSIBILITIES
The directors are responsible for the notes in accordance with the International
preparation and fair presentation of Financial Reporting Standards and the
the annual financial statements of EFC requirements of the Companies Act,
Uganda Limited (MDI), comprising of 2012 of Uganda and the Microfinance
the statement of financial position as Deposit-taking Institutions Act, 2003,
at 31 December 2021 and the statements and for such internal control as the
of profit or loss and other comprehensive directors determine is necessary to
income, changes in equity and cash enable the preparation of financial
flows for the year then ended, and the statements that are free from material
notes to the financial statements which misstatements, whether due to fraud
include a summary of significant or error.
accounting policies and other explanatory
Pages 48
The directors are ultimately
responsible for the internal controls. The directors have assessed the
The directors delegate responsibility Company's ability to continue as a
for internal control to management. going concern and have no reason to
Standards and systems of internal believe the business will not be a
control are designed and going concern for the next twelve
implemented by management to months from the date of this
provide reasonable assurance as to statement.
the integrity and reliability of the
financial statements and to The auditor is responsible for
adequately safeguard, verify and reporting on whether the annual
maintain accountability of the financial statements of EFC Uganda
Company's assets. Appropriate Limited (MDI) are fairly presented in
accounting policies supported by accordance with the International
reasonable and prudent judgments Financial Reporting Standards, the
and estimates, are applied on a Companies Act, 2012 of Uganda and
consistent and going concern basis. the Microfinance Deposit-taking
The directors are also responsible for Institutions Act, 2003.
maintaining adequate accounting
records and an effective system of
risk management.
Approval of the financial statements
The annual financial statements of EFC Uganda Limited (MDI) were approved
by the board of directors on…………………………………and signed on its behalf by:
DIRECTOR DIRECTOR
Pages 49
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF EFC UGANDA
LIMITED (MDI)
Report on the Audit of the Financial with International Standards on Auditing
Statements (ISAs). Our responsibilities under those
standards are further described in the
Auditor’s Responsibilities for the Audit
Opinion of the Financial Statements section of
our report. We are independent of the
We have audited the financial statements
Company in accordance with the
of EFC Uganda Limited (MDI) (the
International Ethics Standards Board
Company), which comprise: the statement
of Accountants’ Code of Ethics for
of financial position as at 31 December
Professional Accountants (IESBA Code)
2021; and the statement of profit or loss
together with the ethical requirements
and other comprehensive income,
that are relevant to our audit of the
statement of changes in equity, and
financial statements in Uganda, and
statement of cash flows for the year
we have fulfilled our other ethical
then ended; and notes to the financial
responsibilities in accordance with these
statements, including a summary of
requirements and the IESBA Code. We
significant accounting policies.
believe that the audit evidence we have
obtained is sufficient and appropriate
In our opinion, the accompanying financial
to provide a basis for our opinion.
statements give a true and fair view of
the financial position of the Company
as at 31 December 2021 and of its financial Key Audit Matters
performance and its cash flows for the
year then ended in accordance with Key audit matters are those matters
the International Financial Reporting that, in our professional judgment, were
Standards, the Micro Finance Deposit of most significance in our audit of the
Taking Institutions Act, 2003 and financial statements of the current
requirements of the Companies Act, period. These matters were addressed
2012 of Uganda. in the context of our audit of the financial
statements as a whole, and in forming
our opinion thereon, and we do not
Basis for Opinion provide a separate opinion on these
matters.
We conducted our audit in accordance
Pages 50
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF EFC UGANDA LIMITED (MDI) (CONTINUED)
Report on the Audit of the Financial Statements (Continued)
Key Audit Matters (Continued)
1. Impairment of loans and advances

The impairment of loans and advances number of assumptions when designing
is a key audit matter due to the degree and implementing impairment model
of judgment and estimation required. that is compliant with IFRS 9 Financial
The identification of impairment and Instruments. The model uses risk
the determination of the recoverable parameters, such as loss given default,
amount are an inherently uncertain exposure at default and probability of
process involving various assumptions default to calculate an expected credit
and factors including the financial loss based on past experience and
condition of the counterparty, expected judgment in situations where this past
future cash flows, observable market experience is not considered to be
and economic matters. The use of reflective of future outcomes due to
different modelling techniques and limited or incomplete data. Refer to
assumptions could produce significantly note 15(a) that describes the assumptions
different estimates of impairment loss made in determining impairment.
provisions. Management has made a
Our audit procedures included the following, amongst others:
We reviewed the expected credit loss impairment model and impairment

methodology adopted by management.
Tested the assumptions underlying the impairment quantification.
Tested the appropriateness and accuracy of inputs to the model and where
available compared data and assumptions to external benchmarks; and
Evaluated the output of the impairment models in comparison to the adjustments
in the general ledger.
For a sample of customer accounts, we evaluated management assessment of
credit risk arising from the customer balances.
The combination of the data validation and substantive tests that we carried
out gave us sufficient evidence to rely on the inputs of the model and the
impairment charge included in the financial statements
Pages 51
2. IT systems and controls
The Company is dependent on IT systems to (a)
serve customers, (b) support business processes,
(c) ensure complete and accurate processing of
financial transactions and (d) support the overall
internal control framework. Many of the Company’s
internal controls over financial reporting are
dependent upon automated application controls
and completeness and integrity of data/reports
generated by the IT systems. The Company acquired
and implemented a new core banking system
effective October 2020. Given the complexity of
the infrastructure and a high dependency on the
core banking system, we considered this to be a
key audit matter for our audit.
Pages 52
Our audit procedures Our opinion on the financial statements
does not cover the other information and
included the following, we do not express any form of assurance
amongst others: conclusion thereon.
Assessed management principles
and processes for modifications In connection with our audit of the financial
to the IT-environment. statements, our responsibility is to read the
Evaluated key controls like other information and, in doing so, consider
segregation of duties for personnel whether the other information is materially in-
working with development and consistent with the financial statements or
production environment. our knowledge obtained in the audit or
otherwise appears to be materially misstated.
Evaluated controls around the
If, based on the work we have performed,
interfaces of various systems of
the company, evaluated the we conclude that there is a material
process for identity and access misstatement of this other information, we
management, including access are required to report that fact. We have
granting, change and removal. nothing to report in this regard.
Evaluated the appropriateness Responsibilities of Management and Those
of controls for security governance
Charged with Governance for the Financial
and system hardening to protect
systems and data from unauthorised Statements
use, including logging of security
events and procedures to identify Management is responsible for the preparation
known vulnerabilities. and fair presentation of the financial
statements in accordance with IFRSs, and
We also performed various data for such internal control as management
analytic tests to check the determines is necessary to enable the
completeness, accuracy and
preparation of financial statements that
reliability of data output reports
from the core banking system. are free from material misstatement, whether
due to fraud or error.
The combination of the test of
controls and data validation tests, In preparing the financial statements,
that we carried out described management is responsible for assessing
above gave us sufficient evidence the Company’s ability to continue as a going
to rely on the results of the system concern, disclosing, as applicable, matters
for the purpose of our work. related to going concern and using the going
concern basis of accounting unless
Other Information management either intends to liquidate
the Company or to cease operations, or
Management is responsible for the
has no realistic alternative but to do so.
other information. The other
information comprises the information
included in the directors’ report Those charged with governance are
but does not include the financial responsible for overseeing the Company’s
statements and our auditor’s report financial reporting process.
thereon.
Pages 53
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EFC
UGANDA LIMITED (MDI) (CONTINUED)
Report on the Audit of the Financial Statements (Continued)
Auditor’s Responsibilities for the Audit of the Financial Statements
IOur objectives are to obtain reasonable omissions, misrepresentations, or the

assurance about whether the financial override of internal control.
statements as a whole are free from Obtain an understanding of internal
material misstatement, whether due control relevant to the audit in order to
to fraud or error, and to issue an auditor’s design audit procedures that are
report that includes our opinion. appropriate in the circumstances, but
Reasonable assurance is a high level not for the purpose of expressing an
of assurance but is not a guarantee opinion on the effectiveness of the
that an audit conducted in accordance Company’s internal control.
with ISAs will always detect a material Evaluate the appropriateness of
misstatement when it exists. Misstatements accounting policies used and the
can arise from fraud or error and are reasonableness of accounting estimates
considered material if, individually or and related disclosures made by
in the aggregate, they could reasonably management
be expected to influence the economic Conclude on the appropriateness of
decisions of users taken on the basis management’s use of the going concern
of these financial statements. basis of accounting and, based on the
audit evidence obtained, whether a
As part of an audit in accordance with material uncertainty exists related to
ISAs, we exercise professional judgment events or conditions that may cast
and maintain professional skepticism significant doubt on the Company’s
throughout the audit. We also: ability to continue as a going concern.
If we conclude that a material uncertainty
Identify and assess the risks of material exists, we are required to draw attention
misstatement of the financial statements, in our auditor’s report to the related
whether due to fraud or error, design disclosures in the financial statements
and perform audit procedures responsive or, if such disclosures are inadequate,
to those risks, and obtain audit evidence to modify our opinion. Our conclusions
that is sufficient and appropriate to are based on the audit evidence obtained
provide a basis for our opinion. The risk up to the date of our auditor’s report.
of not detecting a material misstatement However, future events or conditions
resulting from fraud is higher than for may cause the Company to cease to
one resulting from error, as fraud may continue as a going concern.
involve collusion, forgery, intentional
Pages 54
Evaluate the overall presentation, about the matter or when, in extremely
structure and content of the financial rare circumstances, we determine
statements, including the disclosures, that a matter should not be
and whether the financial statements communicated in our report because
represent the underlying transactions the adverse consequences of doing
and events in a manner that achieves so would reasonably be expected
fair presentation. to outweigh the public interest
We communicate with those charged benefits of such
with governance regarding, among communication.
other matters, the planned scope
and timing of the audit and significant Report on Other Legal and
audit findings, including any significant Regulatory Requirements
deficiencies in internal control that
we identify during our audit. As required by the Companies Act,
2012 of Uganda we report to you,
We also provide those charged with based on our audit, that:
governance with a statement that
we have complied with relevant (i) We have obtained all the information
ethical requirements regarding and explanations which, to the best
independence, and to communicate of our knowledge and belief, were
with them all relationships and other necessary for the purposes of our
matters that may reasonably be audit;
thought to bear on our independence,
and where applicable, related (ii) In our opinion, proper books of
safeguards. account have been kept by the
Company, so far as appears from
From the matters communicated our examination of those books; and
with those charged with governance,
we determine those matters that (iii) The Company's statement of financial
were of most significance in the audit position (balance sheet) and statement
of the financial statements of the of profit or loss and other comprehensive
current period and are therefore the income (income statement) are in
key audit matters. We describe these agreement with the books of account.
matters in our auditor’s report unless The engagement partner on the
law or regulation precludes public audit resulting in this independent
disclosure auditor’s report is CPA Kenneth
Makanga, holding practicing license
number - P0324.
Kenneth Makanga BDO East Africa

Partner Certified Public Accountants of Uganda
P.O Box 9113, Kampala, Uganda
Date ……………………………………….
Pages 55
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE
INCOME
2021 2020
Notes UGX’000
UGX’000
Interest income 5 15,344,794 17,787,861
Interest expense 6 (9,917,429) (6,821,990)
Net interest income 5,427,365 10,965,871
Net Fee and Commission 7 2,687,447 1,859,564

Income
Investment Income 8 2,540,221 726,117
Other income 9 1,036,335 152,978
Operating Income 13,704,530

11,691,368
Staffcosts 10 (a) (6,301,259) (4,517,412)
Administrative Costs 10 (b) (6,988,568) (2,548,797)
Operational Costs 10 (c) (1,882,674) (2,263,654)
Impairment Charge 1 5 (b) (3,021,211) (1,730,064)
Finance Costs 11 (122,928) (215,062)
(Loss)/ Profit Before Tax (6,625,272)

1 3 (a) 2,429,541
Income Tax Charge - -
Loss/ (profit) for the Year

(6,625,272)
Other Comprehensive 2,429,541
Income -
-
Total Comprehensive(Loss) (6,625,272) 2,429,541
/income for the Year
Pages 56
STATEMENT OF FINANCIAL POSITION
2021 2020
Notes UGX’000 UGX’000
ASSETS
Cash and cash equivalents 14 5,100,846 10,266,416
Investments 1 6(a) 45,645,650 9,836,740
Net loans and advances 1 5(a) 42,662,969 57,981,861
Other assets 17 1,786,3 68 1,333,327
Current tax recoverable 1 3(c) 475,532 472,660
Property and equipment 18 870,55 8 1,039,052
Right-of-use assets 1 9(a) 782,074 2,405,583
Intangible assets 20 4,171,463 3,942,101
TOTAL ASSETS 101,495,46 0 87,277,740
EQUITY AND LIABILITIES

Equity
Share capital 21 (a) 30,539,09 7 24,263,683
Accumulated losses (20,015,894) (11,861,476)
Regulatory reserve 22 1,529,146 -
12,052,3 49 12,402,207
Liabilities
Deposits from customers 25 78,006,124 38,850,998
Other liabilities 27 1,106,3 90 2,373,982
Borrowings 23 9,118,768 29,996,945
Provision 28 72,77 6 40,000
Lease liabilities 1 9(b) 813,922 2,459,406
Compulsory term deposits 26 325,131 1,154,202
89,443,111 74,875,533
TOTAL EQUITY AND LIABILITIES 101,495,46 0 87,277,740
STATEMENT OF CHANGES IN EQUITY
Share Accumulated Regulatory Total

capital losses reserve UGX’000
UGX’000 UGX’000 UGX’000
At 1 January 2021 (11,861,476) 12,402,207

24,263,683 -
Additional paid-in Capital 6,275,41 4 - - 6,275,414
Total comprehensive loss for the

- (6,625,272) - (6,625,272)
year
Pages 57
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
Transfer to regulatory reserve - (1,529,146) 1,529,146 -
At 31 December 2021 30,539,09 7 (20,015,894) 1,529,146 12,052,3 49
At 1 January 2020 24,263,683 (14,340,263) 49,246 9,972,666

Total comprehensive income for
the year - 2,429,541 - 2,429,541
Transfer to regulatory reserve - 49,246 (49,246) -
At 31 December 2020 24,263,683 (11,861,476) - 12,402,207
STATEMENT OF CASH FLOWS

2021 2020
Notes UGX’000 UGX’000
Cash flows from operating activities
(Loss)/profit before tax (6,625,272) 2,429,541
Adjustments for non-cash items:
Amortization of right-of-use asset 19(a) 755,691 719,611
Depreciation and amortisation 10(c) 285,366 287,822
Interest on leases 19(b) 122,928 215,062
Adjustment for changes in lease terms 19( c) (25, 476) -
Interest on borrowings 23(b) 3,143,732 3,037,923
Unrealised foreign exchange on borrowings 23(b) (4,288,541) 275,407
Prior year adjustment 19(b) - 211,221
Loss on disposal of property and equipment 10(b) - 28,847
Increase in provision 32,776 20,000
(6,598, 796) 7,225,434

Changes in working capital
Decrease/ (increase) in net loans and advances 15,318,8 86 (20,057,068)
(Increase)/decrease in other assets (453, 040) 743,299
Increase in deposits from customers 39,155,126 13,231,388
(Decrease) /increase in compulsory term deposits (829,071) 85,739
(Decrease)/ increase in other liabilities (1,267,592) 1,619,824
Cash used in operating activities 45,325, 51 3 2,848,616

Tax paid 13(c) (2,872) (13,394)
Interest paid 23(b) (3,070,038) (2,759,442)
Net cash generated fromoperating activities 42,252, 603 75,780
Cash flows from investing activities

Investment in fixed term deposits 16( c) (34,761,860) 2,075,305
Pages 58
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
Purchase of property and equipment 18 (100,804) (263,302)
Purchase of intangible assets 20 (245,425) (3,931,865)
Proceeds from disposal of property and equipment - 5,781
Net cash used in investing activities (35,108,089) (2,114,081)
Cash flows from financing activities

Proceeds from issue of shares 21 (a) 6,275,414 -
Proceeds from borrowings 23 (c) 8,810,5 44 19,563,689
Repayments of principal 23(b) (25,429,146) (6,125,653)
Lease payments 19(b) (875,118 ) (989,663)
Net cash (used in)/generated from financing

activities (11,218,3 06) 12,448,373
Net (decrease)/increase in cash and cash equivalents (4,073,792 ) 10,410,072

Cash and cash equivalents at start of year 12,584,883 2,174,811
Cash and cash equivalents at end of year 14 (b) 8,511,091 12,584,883
Pages 59
SITUATIONAL
ANALYSIS &
EXTERNAL ENVIRONMENT
Pages 60
Operating Environment
and Strategic Response
EFC’s model is distinct in that it targets for Kampala whose major activity is
exclusively entrepreneurial Ugandans trading in non-agricultural produce
with Micro Small and Medium enterprises (57%), with only about 23% trading in
and partners with them through Agriculture produce and 17% employed.
provision of financial services to This further strengthens EFC’s case
improve their businesses. for concentrating its presence in
EFC currently serves over 5,000 credit Kampala.
and savings clients in two branches
and 5 Business Service Centres (a All of EFC’s clients are small and
total of 7 locations) mainly within medium entrepreneurs some trading
Kampala and its neighboring suburbs. as individuals in their own right while
EFC intends to reach over 20,000 others have incorporated their
savings and credit clients by 31 businesses. The majority of the
December 2025 with a loan portfolio businesses are owner managed. EFC
of over UGX 100 billion through its targets entrepreneurs with business
current lending methodologies. incorporated or otherwise often in
business for about 5 years. These
EFC targets the growth-oriented businesses range from a stall in the
businesses in the upper SME segments market, a large merchandising shop,
who are economically productive. A or smaller shop at a shopping arcade
study conducted in 2011 confirmed or mall or doing value addition to
that there were between 800,000 to agricultural produce as a cottage
1.1 million active MSMEs mainly in the industry but rarely doing primary
urban areas. Uganda is still largely an agriculture save for poultry farmers.
agrarian economy with the most EFC believes that targeting entrepreneurs
recent statistics from UBOS indicating of Uganda will ultimately lift the nation
that 70% of the population is engaged out of poverty.
in crop farming, 15% in trading of The economic activities currently
agricultural produce and a mere 6% funded by EFC include:
trading in non-agricultural produce.
However, the picture is slightly different
Pages 61
The Economic Activities Currently Funded by EFC

as at End 2022
Pages 62
Market Potential
Uganda has a population of about provider to the large unemployed
40 million people and is one of Africa’s numbers that make up this population
youngest population. Uganda was segment through providing a basis
also named by the World Bank as for job increases in the country. About
Africa’s most entrepreneurial country 500,000 youth are expected to enter
although the majority of the businesses the labor market every year, hence
do not live long enough to see their the number of new entrants into the
2nd anniversary. labor force will be growing and will
Uganda’s economy had been growing be younger in the next few decades.
at an average of 6.5% p.a. over the EFC has an opportunity arising from
last decade before growth rates fell this need that can be mined. EFC can
under 5% for the past 2 years, while also utilise this target population to
absolute poverty levels have been drive related social and corporate
falling. It is possible that within the responsibilities targeting and supporting
next 5 to 10 years the potential market the youth, education and training to
for financial services could reach 20 capture market share and also give
million people from the current back to the community.
estimate by Finscope of 7 million.
EFC’s Target market provides an We are differentiated from our
opportunity to tap into Uganda’s competitors on the basis of our sole
largest and most rapidly growing target market being MSMEs.
population in the world (about 53%
of Uganda’s population), this places
EFC as a national strategic solution
Competitive Advantage
EFC’s competitive advantage is drawn and through ‘’a professional customer
from providing an awesome customer care environment’’ to create an
experience through professional enviable client experience through
customer service. This include industry quality and speed of service in very
leading Turn Around Times enabled well built and neat branches.
by a heightened use of technology
Pages 63
MACRO ECONOMICS IN PLAY

Uganda Macro-Economics stance 2021
Uganda’s economy is steadily recovering tensions pose a significant downside
and estimated to have grown by about risk to Uganda's growth.
6.5-7.0 percent in 2021 following a 1.5 Inflation and outlook
percent contraction in 2020 as the Inflation remains benign and within
COVID-19 pandemic led to shutdowns the BOU target of 5 percent. Indeed,
of some parts of the economy. annual headline and core inflation
averaged 2.1 percent and 2.7 percent,
The economic growth recovery is on respectively, in 2021.
track and the growth outlook is now
stronger than earlier anticipated At the back of the low inflation, lies low
reflecting a broadening of economic aggregate demand occasioned by the
growth as the economy fully reopens, lockdowns, exchange rate appreciation,
solidifying investor and consumer which sufficiently counteracted the
optimism as signaled by high frequency cost push factors related to global and
indicators of economic activity, and domestic supply side disruptions and
supportive monetary and fiscal policies. elevated global commodity prices.
Outlook: In 2022, the growth momentum The outlook for inflation remains largely
could slow down as global factors turn unchanged from that of the December
adverse; therefore, real GDP growth is 2021. Indeed, core inflation is expected
projected at 6.0 percent. However, the to average 3.9 percent in 2022 and 5.3
recovery remains fragile and uneven percent in 2023, while headline inflation
across sectors. is expected to average at 4.5 percent
The risks to the growth outlook remain in 2022 and 5.6 percent in 2023. The
tilted to the downside and could be gradual acceleration in consumer prices
hampered by a resurgence of the reflects the recovery of the aggregate
pandemic and new COVID-19 variants. demand and in the near term, higher
On the global front, a faster global energy and food prices are support
economic slowdown, prolonged supply levers to lift up inflation.
chain disruptions and geopolitical
The Inflation trends in the medium term may not directly affect EFC’s business;
at a projected range of 3.9 (2022) – 5.3(2022) percent inflation rates remain
stable overall.
Pages 64
Exchange Rates
Overall, in 2021, the Shilling stayed on an appreciation
path observed since the beginning of 2019. The
appreciation was supported by a combination of
domestic and global developments including: the
weakening of the US dollar, increased inflows from coffee
export receipts, personal transfers, portfolio inflows as
well as external official development assistance, amidst
subdued private sector demand.
Outlook: In the near term, the shilling is expected to

depreciate against the US dollar, partly due to a pickup in
import demand as economic activity recovers and the
expected correction of the overvaluation estimated at 3-5
percent.
EFC strives to balance its FX Liabilities with corresponding

FX Assets given the material exposure in relation to
Lendahand EURO Long term Loan liabilities.
Pages 65
Interbank money market

The interbank money market rates remained well anchored around the
Central Bank Rate (CBR) in the quarter ended December 2021. The 7-day
interbank rate, which is the BOU operational target averaged 6.9 percent in
the quarter ended December 2022, the same level registered in the month
ended October 2021, reflecting relative stability in the money market.
In the primary market, yields on government securities, especially on the

shorter-end of the market moderated, partly reflecting the accommodative
monetary policy stance. The average yields on the 91-day Treasury bills
declined to 6.39 percent in the quarter to December 2022 from 7.0 percent in
the previous quarter. Yields on the 182-day Treasury bill rates remained
unchanged over the same period. Conversely, average yields on the 364-day
Treasury bills stood at 9.9 percent in the quarter to December 2021.
Lending and Deposit Interest Rates

Commercial banks’ interest lending rates rose in the quarter to
December 2021 relative to the quarter ending September 2021. The
weighted average lending rate on the shilling-denominated loans stood
at 19.4 percent in December 2021, which was 150 basis points higher
than the previous quarter.
The shoot-up in the lending rates was largely on account of increases of

rates in the Agriculture and Building, construction, and Real Estate
Sectors by 41 basis points and 23 basis points, respectively. These two
sectors constitute about 33 percent of the total loans.
Pages 66
Interbank
Money Market
The interbank money market rates
remained well anchored around the
Central Bank Rate (CBR) in the quarter
Asset ended December 2021. The 7-day
interbank rate, which is the BOU
Quality operational target averaged 6.9 percent
in the quarter ended December 2022,
Commercial banks’ asset the same level registered in the month
quality as measured by the ended October 2021, reflecting relative
ratio of non-performing loans stability in the money market.
(NPLs) to gross loans improved
in the quarter to December In the primary market, yields on
2021 to 5.3 from 5.4 in the government securities, especially on the
previous quarter. The ratio is shorter-end of the market moderated,
however slightly higher than partly reflecting the accommodative
the pre-COVID-19 level, which monetary policy stance. The average
could be an indicator that the yields on the 91-day Treasury bills
Credit Relief Measures have so declined to 6.39 percent in the quarter to
.
far helped. Although, the December 2022 from 7.0 percent in the
industry NPLs ratio is generally previous quarter. Yields on the 182-day
low, some sectors of the Treasury bill rates remained unchanged
economy such as Mining, and over the same period. Conversely,
Real Estate sectors exhibited .
average yields on the 364-day Treasury
increases in the NPLs ratios. bills stood at 9.9 percent in the quarter to
December 2021.
Pages 67
HOW WE
CREATE VALUE
Pages 68
Customer Testimonial
Moses Buwembo a male Ugandan is a dealer in new music sound systems in
downtown (William Street) Kampala. He is one of the many flourishing customers
that have benefited from our loans and the flexible payment plans.
Moses started working with EFC Uganda Limited (MDI) 3 Years ago at a time
when his business badly needed financial support.
“3 years ago, I was financially desperate, my sister who is a customer with EFC
Uganda Limited (MDI) advised me to go and get a loan from EFC Uganda Limited
(MDI) to resurrect my business.” Moses happily confesses that he has never
looked back as his business has greatly expanded over the years.
Moses first got a loan of UGX 5 million & most recently UGX 9 million
to boost his business. “EFC Uganda Limited (MDI) has many advantages,
the most important one of them being that they listen to their customers,
in case of challenges like the recent Covid -19 pandemic, they always
listen and revise one’s repayment plan.”
“I encourage everyone who needs business push to come

to EFC Uganda Limited (MDI) for help.”
Moses
Buwembo
Pages 69
PICTORIAL
Send Off Management Retreat
Business Summit
Management Retreat Business Summit
Pages 70
Head Office:
Efc House, Kira Road, Kampala, Uganda.
Email: Info@efcug.com
Web: www.efcug.com

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ANNUAL

About our Integrated Report 04

About EFC Uganda 09

ALCO Asset - Liability Committee

CAR Capital Adequacy Ratios

ECL Expected Credit Loss

EFC Entrepreneurs Financial Centre

EXCO Executive Committee

HIL Home Improvement Loans

IFRS International Financial Reporting Standards

KPI Key Performance Indicators

NPLs Non-Performing Loans

PAT Profit After Tax

WMT Women Market Traders Loan

To be the preferred To partner with MSMEs

Compliance with the laws and rules in effect;

Compliance with ethical and professional rules of conduct;

Compliance with national and international standards and

practices for accounting and financial information;

Respect for microfinance best practices;

Transparency in all aspects of its business;

Social responsibility and consumer protection relative to all

EFC products and services;

Independence in the appointment of Directors and their

decision making (i.e. democratic action).

Développement International Desjardins (DID)

AfricInvest Financial Sector Limited

Uganda Gatsby Trust (UGT)

Belgian Investment Company for Developing Countries

Home Improvement Loans

Efficient housing loan services

Women Market Trader Loans

Quick small loans ranging from

EFC VALUE PROPOSITION;

This is usually 2 to 5 days maximum depending on the securities pledged

Annual statement of comprehensive income

Operating expenses as a percentage of

Permanent shareholder equity in the form of

Supplementary capital General provisions

The sum of core capital and supplementary

General performance of the Despite the above as well as the

CUSTOMER DEPOSITS: grew by 95.8% in 2021 from Ushs 40.0 billion in

NET LOANS TO TOTAL ASSETS:

TOTAL DEPOSITS TO TOTAL ASSETS: The ratio remarkably went up to

77% courtesy of a substantial growth in customer deposits (95.8%) in 2021.

Total Assets (UGX Billions)

Total Assets (UGX - Billions) CAGR

Customer Deposits (UGX Billion)

Customer Deposits (UGX - Billions) CAGR

Net Loans & Advances ( UGX Billions)

Return on Average Equity:

Return on Average Assets:

Cost to Income Ratio (Excluding Loan Loss Provision Expense):

Cost to Income Ratio (Including Loan Loss Provision Expense):

It is my pleasure to present EFC’s Annual

The Financial Year 2021 was quite a difficult one for

At EFC, our exposure to the education, entertainment,

We are glad to report that in August 2021, our

The Ministry of Finance reported that the economy

The Board continued to steer the On behalf of the Board, I congratulate

Outlook for 2022

Shem is an experienced banker who joined EFC from one