Our provider in Ghana, Premier Resource Consulting (PRC), is currently experiencing some challenges in terms of institutional capacity and portfolio quality. Furthermore, bank bureaucracy has led to significant delays in the transfer of repaid funds.
PRC has been active on the MYC4 platform since September 2008 and has over the years disbursed close to €490,000 to 57 small businesses in Ghana. At the beginning of 2012, PRC’s outstanding loan balance (OLB) was around €150,000, and since March it has been reducing slowly but steadily every month to its current volume of €45,000 (see graph below). The large reduction in OLB is due to the fact that PRC has not been allowed to upload new loans to the MYC4 platform in the last three quarters of the year. This decision was made by MYC4 together with PRC with a view to ensure that all PRC’s resources were utilised to monitor and manage the outstanding loans. From a credit risk perspective, it was also important to keep PRC’s share of the total MYC4 portfolio small considering their relatively poor risk rating. It is therefore positive to note that PRC’s share of the total portfolio has gone from 12 % in January to 2 % in November.
While PRC’s Portfolio At Risk above 30 days (PAR30) has been fairly stable, albeit too high, most of the year, it unfurtunately shot up to 100 % last month. Several actions have been taken to rectify this situation: most importantly, PRC is working on reconciling their accounts with the MYC4 system to make sure that all received repayments are entered correctly and transferred to investors; in addition, PRC is using the services of a debt collection agency to follow up on the most delinquent loans.
Finally, there have been some large delays with repayment processing on PRC loans the past couple of months which have been caused by a lot of bureaucracy in the bank that we use for international money transfers in Ghana. Most of the backlog was cleared two weeks ago when MYC4’s CEO went to talk to the bank manager together with PRC’s CEO, however one bundled repayment is yet to come through.
We will give monthly updates on PRC and their portfolio in 2013.