It is no secret that MYC4 investors have been hit hard by currency losses this year. One of our biggest providers, Gatsby Uganda, has decided to act on this fact by introducing new loan products which offer a higher interest rate to investors. Titus Kuria, MYC4’s Credit Operations Manager has worked closely with Gatsby over the last couple of weeks to ensure that the new products are well thought through.
-The Investor Interest Rate is a key determinant of funding. The key thing here is to strike a balance between offering an attractive interest rate to the investors while maintaining a healthy APR to borrowers, Titus explains.
APR means Annual Percentage Rate and is an expression of the effective interest rate that a borrower pays on a loan annually. To accommodate this balance, Gatsby has reduced its own closing fee from 5 to 2 % on selected products and increased the maximum investor rate from 16 to 20 %. The cost to the borrower is thereby unchanged, but investors will have a greater opportunity to make a positive return on Gatsby’s loans.
The new products can already be seen on Gatsby’s profile page and the first loans with higher investor interest rates are expected on the platform this afternoon.
As we reported here on the blog last week in a post about the East African currencies, MYC4 wants to encourage investors who invest with an objective of making a positive return to take currency risk into account. This may be done either through demanding higher interest rates or through investing in countries with more stable currencies.