Afriland bank exits after two years of operation 

Bank of Uganda has said Afriland First Bank has asked to voluntarily exit Uganda just slightly over two years after it was granted a license in September 2019.

The bank, according to details with the Central Bank has not administered any credit or loans in the 16 months it has been in Uganda.

This could partly explain its decision to exit, worsened by the difficult economic conditions induced by the Covid-19.

While announcing the exit yesterday, Bank of Uganda Deputy Governor Michael Atingi-Ego, said Afriland’s decision for voluntary liquidation was an outcome of strategic business review by the shareholders - Afriland Group.

Bank of Uganda, he said, had on Wednesday (May 25) approved the request from Afriland to apply to the High Court for voluntary liquidation.

However, he added, Afriland was a solvent financial institution, which, therefore, means that all depositors and other verified creditors shall be paid in full.

Afriland, according to Bank of Uganda, has a market share of 0.08 percent and total deposits of Shs958m.

The Uganda banking space is highly saturated, which presents stiff competition and a requirement for huge investment.

Afriland’s exit brings the number of commercial banks operating in Uganda to 25 from 26.

Dr Tumubweine Twinemanzi, the Bank of Uganda executive director for supervision, yesterday said that whereas Afriland had managed to mobilise some deposits in the 16 months of its operation, it had not administered any credit. 

Afriland, Dr Tumubweine further indicated, had by December 2021 accumulated an asset base of Shs31.4b, liability of Shs11.13b and shareholder equity of Shs8.2b, while other liabilities stood at Shs2b.

Asked how the exit would impact the financial market, Dr Twinemanzi said there will be minimal or no impact since the bank had a very small market share, noting that Afriland had started operating in Uganda at a time when the economy was disrupted due to Covid-19, which could have impacted its bottom-line.

Afriland formally started its operations on December 1, 2020, about three months before the economy was locked down due to Covid-19.

The economy was subsequently closed again in June 2021, before it was fully reopened in January 2022. 

Dr Twinemanzi also noted that whereas Afriland will close in Uganda, its operation in other countries will continue to operate. Afriland has operations in Cameroon, DR Congo, Equatorial Guinea, Guinea, Liberia, South Sudan, São Tomé and Príncipe and Zambia.