I want to pick up on my post from Monday, where I briefly touch upon the situation with too little funding for the African businesses on our platform!!
With key learning from the past in our luggage, we now have 6 performing Partners that come with Entrepreneurs who seek funding to develop their business, but more importantly; the Partners come with businesses that have been vetted and found eligible for a loan, as there is a plan for how they will repay the loan!!
The four loans in the picture above are all closing today – actually they close in only a few hours (from 2:26pm CET) and if the auction is unchanged, the Entrepreneurs will go empty handed back to their business and have no option to invest in e.g. additional inventory!
Kabarira (loan 1) is already fully funded hence needs no additional attention in this post – it is the three other loans that calls for your full attention… NOW.
Both Gashugi and Mutangana (loan 2 + loan 3) have had a MYC4 loan before – and both have repaid their loans before time!
Let me top this up; Micro Africa (who is the Provider of all four loans) will cover 100% of defaulted loans through the risk sharing agreement they have made with MYC4 – in everyday language this means that if any of Micro Africa’s Borrowers for some reason is not repaying the loan, Micro Africa will out of their own pocket pay the missing principal amount back to your MYC4 account*!! You can see more about the risk rating of Micro Africa here.
So, I hope you will make this message fly, utilizing the power of Social Media (Facebook, Twitter, Linkedin, etc. etc.).
We know people in general have a busy schedule, which is why we have made it faster to get going – if you choose ‘Donate Money’ you will be able to ‘invest’ within seconds (maybe a minute).
If you don’t make it today – do it tomorrow, because tomorrow 7 additional loan auctions will end!! All in all we have 60 small- and medium sized businesses that want to borrow more than EUR 250,000 (average of EUR +4,000) – this is Africa’s growth engine – lets make it happen!!
I appreciate your help here, cheers folks!
*) Yes, you still carry the currency risk as Investor.
On the Website I can see what the current interest rate is (which is too high on the larger loans), but the effect on any active autobids is not visible. However, since no “green text” is shown, the rates are still too high.
I, too, hope for some “action” within the next two hours.
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I am pretty much convinced that loans with bidding ends before the transfer of repayments (which are mostly bundled together) are disadvantaged compared to those timed just after repayments, since many of the investors only reinvest rather than upload additional funds to their accounts.
For example, I (still a very small investor) am owed almost 10 Euros of pending repayments, which would be reinvested long time ago if they had been already transferred to my account…
In other words, there are days of “systemic” high liquidity on MYC4, giving advantage to the loans with bidding ends around these days, while on the other days, liquidity depends mainly on uploading fresh funds.
The loans above seem to me a victim of this circumstance.
How do you actually address this problem and what solutions could be brought forward? I myself could think of many solutions, that of course have to withstand the test of maximum administrative efficiency.
Thanks
It is correct that there currently is an upside for Borrowers with loans closing, when repayments are ‘coming in’.
As is, we handle repayments on Thursdays and again on Mondays if Providers are a little late. When the flow of capital increases, we will introduce additional repayment days hence ‘eliminate’ the issue you raise.
We are working on several fronts to get additional funding on MYC4 – also larger bulks – let me elaborate on this in the beginning of the new year, ok?
In the mean time I am curious to hear your ideas on this front…
Thanks for your answer Tim!
An idea on the timing issue would be to create a mechanism where bigger loans (which are harder to finance) would be placed, timed and spaced according to the predicted repayment dates and amounts. But since I am ignorant of the exact internal mechanisms, I cannot of course know what is feasable or even reasonable. Of course the ideal situation would be “immediate” repayments, without “bundling” and with minimal delay.
On the larger front of generally increasing the capital in the system, I would propose the creation of a collective investment schemes (similar to a bond fund), that could attract money from financial institutions. A financial institution usually does not have the time to hand pick the African business. However, I could well imagine that they would invest in a financial vehicle created by MyC4 if it fits into their investment strategy. Again, as I am not a financial or legal expert, I cannot possibly say how feasible this is or if it is already offered by you. So it is just the general idea.
Thanks and merry Xmas!