In what is fast becoming a familiar script in Uganda’s SME financing space, Dutch-based impact investor Iungo Capital BV has been dragged into a high-stakes commercial dispute over a USD 303,985 facility with a Ugandan company, reigniting the contentious debate over the legality of foreign lenders operating in the country without local licensing.
The latest clash unfolded in Miscellaneous Application No. 1208 of 2023, arising from Civil Suit No. 514 of 2023, in which Horn Products (U) Ltd, together with its directors Ggala Charles Wilson and Wamala Issa, sought unconditional leave to defend a summary suit filed by Iungo Capital. The Dutch mezzanine lender had gone to court seeking repayment of a disputed loan balance of USD 256,517, but the defendants claim the loan was either already repaid—or in some cases—never even disbursed.
A Pattern of Disputes?
The case throws a spotlight on a growing number of Ugandan-founder versus foreign funder spats that often revolve around similar issues: disputed loan terms, questionable disbursement records, allegations of fraud, and more recently, the legality of foreign investment firms issuing debt without local regulatory registration.
In their affidavit, Horn Products and its directors alleged that Iungo Capital:
- Claimed repayment on undisbursed sums
- Illegally created a mortgage of USD 228,958 on the company’s property
- Acted as a moneylender without local licensing
- Appended ambiguous and possibly altered terms in the loan agreement
- Sought to enforce a foreclosure prematurely, and
- Applied compound interest and penalties that were harsh and unconscionable
At the heart of the legal firestorm is the assertion by Horn’s lawyers that “the Respondent is a non-existent entity under Ugandan law and has no capacity to conduct money-lending business in Uganda.”
Iungo Capital Defends Its Ground
In a strong rebuttal, Birungi Bagenda, the Investment Director at Iungo Capital, insisted the lender acted fully within the law, stating:
- Iungo Capital is duly registered in the Netherlands, and
- Has legal capacity to enforce contracts executed with Ugandan entities
Bagenda noted that Horn Products had voluntarily entered into the loan agreement and had received funds in line with the contractual terms, with mortgage deeds duly executed as part of the facility.
Importantly, the respondent argued that Iungo is not a “money lender” under Ugandan law but rather a financial holding institution investing in SMEs through structured mezzanine debt—a model that blends loans with revenue-based repayment.
Court Flags Inconsistencies, Orders Full Trial
Delivering her ruling on June 24, 2025, Lady Justice Patience T.E. Rubagumya of the Commercial Division of the High Court sided with the applicants on the key question of whether triable issues existed, saying:
“The facts and evidence adduced by both parties disclose triable issues of law and fact that ought to be determined by the Court… [which] places the plaint outside the ambit of Order 36 of the Civil Procedure Rules.”
The court found inconsistencies in Iungo’s own repayment schedule, which listed three disbursements totalling USD 185,000, alongside a mysterious USD 118,985 “Reboot Return”, bringing the total claimed to USD 308,985. Yet, annexed agreements showed only USD 228,958 as the net amount due, raising further questions about disbursement accuracy.
A Wider Implication for Foreign Lenders?
This case adds to a growing chorus of concern over how foreign mezzanine funds and private equity lenders operate in Uganda’s legal grey zones, particularly when it comes to lending regulations, dispute resolution, and repatriation of funds.
The argument that “foreigners can’t lend here” is increasingly being raised by aggrieved Ugandan companies, especially where foreign lenders:
- Lack a local license from the Uganda Microfinance Regulatory Authority (UMRA) or Bank of Uganda
- Do not register as financial institutions under Ugandan law
- Operate through direct offshore disbursements, complicating regulatory oversight
Iungo Capital, which positions itself as a non-dilutive, impact-first mezzanine investor in East Africa’s missing-middle SMEs, now faces the reputational and legal burden of justifying its model in Ugandan courts—again.
A Case to Watch
Justice Rubagumya granted the applicants unconditional leave to appear and defend the suit, ordering them to file their formal defence within 15 days. While no final decision has been made on the validity of the loan claim or the legality of Iungo’s operations, the court’s ruling ensures the matter will now proceed to full trial.
Ruparelia Group Wins Key Entebbe Land Case, Clearing Path for the New Mega Speke Resort and Convention Centre, EntebbeAs similar disputes involving foreign-backed lenders continue to emerge, this case could set precedent on how Uganda regulates non-bank financial institutions operating from abroad.
A Trend of Foreign-Ugandan Financial Disputes
This is not the first time a foreign mezzanine or venture capital fund has found itself embroiled in disputes over financing to Ugandan entrepreneurs. In light of rising cross-border SME financing, calls are growing louder for clear legal frameworks to protect both investors and founders—and ensure a smoother flow of impact capital.
The Iungo–Horn case adds to a growing list of multi-million-dollar legal showdowns between Ugandan business owners and foreign funders, many involving similar claims around unlicensed lending, enforcement irregularities, and shareholder rights violations. They include:
1. Vantage Mezzanine Fund II vs. Patrick Bitature & Simba Group
In what has become Uganda’s flagship foreign funder dispute, South African Vantage Mezzanine Fund II sued tycoon Patrick Bitature and his companies over a $10 million loan issued in 2014. After Bitature defaulted, Vantage tried to enforce its rights through equity conversion and mortgage foreclosure. Bitature resisted, arguing Vantage lacked a Ugandan lending license and could not sue.
Despite an early High Court ruling that Vantage had “no locus,” subsequent judgments—including a 2025 costs ruling—have confirmed Vantage’s rights and referred the dispute to arbitration. Bitature remains liable for what Vantage claims is now over $26 million in principal, interest, and fees.
2. Ham Enterprises vs. Diamond Trust Bank (DTB) Uganda & Kenya
Real estate magnate Hamis Kiggundu sued DTB Uganda and DTB Kenya over a syndicated $10 million loan, alleging DTB Kenya’s participation was unlawful due to a lack of local licensing. In a bombshell 2020 ruling, the High Court sided with Ham, cancelling the debt.
But in 2023, Uganda’s Supreme Court unanimously overturned the decision, confirming that foreign syndicated lending is legal if funds originate abroad and a local bank handles disbursement. Ham is now back in court, with the case focusing on final amounts owed and alleged wrongful charges.
What Next for Iungo Capital?
Iungo Capital markets itself as a “missing middle” financier. It targets East African SMEs too large for microcredit but too small for private equity. Its model is unique: mezzanine debt with revenue-based repayments, allowing founders to retain equity while growing their businesses.
The firm has reportedly made over 90 investments worth USD 22.1 million across Uganda, Kenya, Rwanda, and Tanzania. Yet this lawsuit—and the rising number of foreign investor clashes—could deter similar funds from entering or expanding in Uganda.
While Iungo insists it operates within international norms and fully complies with its contracts, this court case may determine whether those norms are enough in Uganda’s evolving legal landscape.
Conclusion: Precedent in the Making?
As the Horn–Iungo case heads to full trial, observers across legal, investment, and regulatory circles will be watching closely. The verdict may not only affect one lender and one SME—it could reshape the contours of cross-border financing in Uganda, determining how foreign capital can be deployed, protected, and recovered.
With billions in private capital eyeing Africa’s growing enterprises, the core question remains: Can Uganda create a legal framework that protects both founders and financiers, without driving either away?
CEO East Africa Magazine will continue to track developments in this and other precedent-setting cases in Uganda’s financial and investment landscape.