Uganda

Entrepreneur Financial Centre 13

With a loan of EUR 350,000 via local partner EFC, the Kibuye Taxi Park Association will be able to finance the purchase of new taxi vehicles to 50 of its registered members.

  • Local partner investment
  • 10 new jobs
  • 250 people reached

€350,000

Amount

36 months

Maturity

4.00%

Annual interest
21%
Still €275,650 needed, 53 days to go
+ 259 other investors

EFC Uganda Limited (MDI) is a licensed Microfinance Deposit-taking Institution in Uganda. It was created in 2011 by Développement Desjardins International to provide access to financial services for the underserved SME market segment. The company operates in Kampala with a head office, two branches and five business service centers. EFC Uganda is supervised by the Bank of Uganda and has several reputable shareholders. 

Shem Kakembo is the Managing Director since early 2018. Prior to joining EFC Uganda, Shem worked in leading management positions in financial industry in Uganda and Rwanda since 2003. His latest apointment prior to joining was as Head of Personal Markets (Retail) at Stanbic Bank (Uganda’s largest bank). 

Information document of the issuing company EFC (NL)

Information note of the issuing company EFC (BE)

Loan purpose

The Kibuye Taxi Park Association wishes to start doing business with EFC along the following dimensions;

1. EFC lending to the members of Kibuye Taxi Park Nateete Stage Drivers Association to purchase Used Cars/ Taxis recommended by the Association.

 2. For members of the Association who would like to borrow bigger loans that the Society cannot provide to them; these will be referred directly to EFC with the Associations recommendation.

This Association is made up of 100 registered members and 50 nonregistered members. And the Association is fully registered. 

Background

The Association has been in existence for 9 years. It was formed immediately after the closure of UTODA but fully registered their association on 30th July 2020 after being advised that it’s a requirement for them to access borrowing.

Today, the Association has a total of 100 members and are looking forward to having over 150 Members by 2021. All these members are Taxi drivers, owners and conductors.

The transport industry or sector speaks briefly about this section; its contribution to employment and financial muscle, demand and supply dynamics as well.

Management

The association management has got rules and regulations governing them among which are highlighted below;

Monitoring of all vehicles on a weekly basis payment which will be our strong point to monitor payments the way they have been submitting top previous car owners

Failure to pay the previous week, a vehicle will not be allowed to load passengers the following week until a receipt of payment is presented to the association management

The association management will visit each member’s home and guarantor as well as the Credit officer for proper monitoring.

Affordability

The Kibuye Taxi Park Nateete Stage Drivers Association management is the same management at the Kibuye stage in Kibuye.  This is a strong point to note in that cars can be tracked and drivers for payments and monitoring since they report to the stage office on a daily. 

This proposal is backed up by the fact that;

  • The target clients are daily income earners that belong to Kibuye Taxi Park Nateete Stage Drivers Association., a group that deals in transportation of people and different goods to different clients in Kampala and neighboring areas. Most of these people are Taxi drivers, owners and conductors in Kibuye and Nateete where their stages are located. The routes are Kibuye, Nateete, kyengera, Mpigi up to Masaka as the furthest route.
  • It’s proposed that EFC will finance Members of the Association but must be recommended by the Association.
  • We have 50 ready members willing to take up the loan.
  • The cars to be purchased will be ranging between 25 Million to 40 Million.
Company nameEntrepreneur Financial Centre 13
CEOShem Kakembo
Founded2011-01-01
LocationKampala Uganda
SectorServices
Turnover€2,500,000
Employees132

Impact of this project

  • With this investment 10 jobs are created
  • With this investment 250 people are reached

About the investment

TypeLocal partner investment
IssuerEFC Uganda
Funding target€350,000
Annual interest4.00%
Maturity36 months
Repayment periodSemiannually
CurrencyEUR
Terms and conditionsShow
Note termsDownload
Information document issuerDownload

About the risks

What are the risks of investing money?

Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose . In addition, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to funders, our local partners face risks of their own that could effect their ability to secure a loan. These include: - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.

If you invest direct in a company, hence not via a local partner, risks of default are not covered. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest rate is also higher.

There is also some operational risk at Lendahand. An example might be that Lendahand is unable to find shareholders to finance their activities. In such a case, Lendahand will handle outstanding loans at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.

How does Lendahand minimize the risks?

Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. In other words, they must have proven themselves as a meso-credit provider for SMEs. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the partner and how robust their (internal) procedures are. Finally, the loans that a local partner receives via Lendahand must be in proportion to the partner's total balance sheet. A healthy balance between effectuating influence and independence is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via info@lendahand.com.

When currency exchange risks become too high for a local partner, Lendahand will urge the local partner to cover these risks. In some scenario's the local partner is contractually obliged to comply with these demands.

Lendahand will always conduct due diligence when a Company requests for a direct loan. To provide more insights on risks, an independent partie comes in to perform brief analysis on direct loans. The results can be downloaded on the project detail page of the direct loan. However, this analysis serves primarily as a tool for your own opinion and conclusion. Pay attention to the fact this analysis is not an investing advice.

Does Lendahand provide guarantee on the loans?

Normally we don't. Local partners take care of the repayment, even if (some) entrepreneurs are unable to do so themselves. If the local partner is for some reason unable to repay then there is a chance of partial or full loss of your money. For this reason Lendahand only selects financially solid partners based on strict criteria.

Also, for most direct loans no guarantee is provided. For these investments currency risks are covered however.

Sometimes - and only for some direct investments in Africa - our partner Sida, part of the Swedish government, will provide a guarantee with a maximum of 50%. If this is the case, it will be indicated explicitly.

Does Lendahand have a license or exemption?

Yes. The Dutch Authority Financial Markets (AFM) has provided Hands-on B.V. (with trade name 'Lendahand') in September 2016 with an investment firm license in accordance with article 2:96 of the Financial Markets Supervision Act (Wft). Placing orders on Lendahand's website is therefore an AFM regulated activity. Lendahand also meets its minimum capital requirements of EUR 125,000 following its license as required by De Nederlandsche Bank (DNB).

Lendahand uses an exemption from an approved prospectus that is available up to EUR 5 Million per year. 

How safe are my personal details?

We adhere to strict safety requirements with regards to private and payment details. All sensitive data is sent through an encrypted connection (https). Also, data is stored (encrypted) in a secured facility provided by AWS: the world largest hosting service. Customer documents can only be retrieved by a secured connection and multi-factor authentication.

What happens if the local currency devaluates?

Our local partners and Companies bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro.

Does Lendahand use a third foundation fund?

Lendahand works with Intersolve EGI: a Dutch financial institution that specialises in offering services in the field of payment settlement and electronic money. To be able to offer these financial services Intersolve EGI must comply with the applicable financial legislation. Intersolve EGI is therefore supervised by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) and is in possession of a license to act as an Electronic Money Institution (and therefore also has a license as a Payment Institution). Your money will be deposited on a protected and secure bank account until the project you have invested in has been fully funded. Intersolve in no way has access to these funds. Once the project is fully funded, the money is transferred to the local partner or company in question.

What happens with my money if Lendahand goes bankrupt?

If Hands-On BV (containing the brand name Lendahand) would go bankrupt trades between Lendahand and payment service provider Intersolve EGI would cease immediately. Intersolve will then transfer the funds in your personal wallet to your bank account (Note: if at this time the project you have invested in has been fully funded and the money has thus been transferred to the local partner, these funds will not be transferred back to your bank account). Intersolve will then in consultation with a trustee handle all repayments between the investors and investees up until the final repayment of the last project has taken place.

Additionally, Lendahand is part of the investor compensation scheme (ICS). This scheme aims to compensate individuals and small businesses who have trusted money and or financial instruments (such as notes or options) to a licensed bank, investment firm or a financial institution in case the financial firm is unable to meet its obligations arising from claims related to the investment service (in other words, if Hands-On BV is not keeping track of the acquired notes by investors in the Wge depot correctly). The ICS guarantees an amount of up to EUR 20,000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210

Why is my money going via Intersolve EGI?

As part of the AFM license for investment firms it is required that operational activities carried out by Lendahand (maintaining the website, contracting of local partners, legal issues, etc.) are strictly separated from financial transactions (payments made through the website). Intersolve takes care of the payments. This collaboration offers you more security, since your money is placed on a protected bank account immediately after you have made your payment.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there will be a chance that you lose (part of) the amount you lend. Obviously Lendahand will try to recover outstanding payments, but the success rate will be limited in such situations. For the investor there is no possibility to take action against the financial institution. From a legal point of view the local partners are separated, therefore it is recommendable to spread loans across different local partners.

About EFC Uganda

Portfolio Overview€5,889,789
Equity / total assets31.00%
Write-off ratio last 12 months4.10%
% investment amount in arrears (>90 days)1.60%

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