As we close for the Easter break, here is this month’s provider update.
With close to €650,000 outstanding in more than 1,300 loans, the Micro Africa group is by far the largest provider on the MYC4 platform. This is also evident from the number of open loans today where 2/3rds are from one of the three Micro Africa subsidiaries (in Kenya, Uganda, and Rwanda). Micro Africa Ltd was recently acquired by Letshego Holdings Ltd from Botswana, and in Kenya, Micro Africa has become the largest credit only MFI. In Uganda, the institution is also growing fast, now with more than 12,000 clients and the intention to double in 2013. RML in Rwanda is in the process of converting into a deposit taking institution.
Yehu Microfinance Trust
The pilot evaluation was successfully completed this month, despite some delays due to planning and hesitancy around the presidential election in Kenya. Overall, things are looking good with the Mombasa-based institution; Yehu’s own outstanding loan balance (OLB) grew by 31% in 2012, and there were also increases in terms of profit, operational self sustainability, and return on equity. Yehu has picked up its volume on the MYC4 platform this year, and the OLB is growing slowly (now at around €65,000 in 220 loans). In light of the evaluation, we are hoping to see Yehu add at least another €100,000 to its MYC4 portfolio in the coming quarter.
Tujijenge Uganda Ltd
The bi-annual spot check of Tujijenge Uganda was completed last week. The key takeaways were that the institution is following sound risk management principles and remain committed to uplifting the bottom of the pyramid (BOP), meaning people from the poorest socio-economic group. Tujijenge Uganda remains small, however, and it is therefore not expected that its portfolio on MYC4 will grow much in the short to medium term. Its current outstanding loan balance on MYC4 is around €95,000 (in close to 330 loans) which fits well with Tujijenge Uganda’s current institutional and absorptive capacity.
It has been a while since we saw new loans from SISDO on the platform. First, SISDO was paused awaiting the pilot evaluation back in January as its maximum OLB ceiling had been reached during the pilot period. Then there were some challenges in terms of performance due to operational teething problems in February. Our team in Nairobi has been supporting SISDO with the systems reconciliation and the portfolio at risk above 30 days (PAR30) is now back at 0 %. We are therefore hopeful that SISDO will start uploading loans to the platform again in the coming month.
Gatsby Microfinance Ltd
The bi-annual spot check of Gatsby Microfinance Ltd (GMFL) was completed last week and it showed adherence to the MYC4 model and sound credit risk management principles (incl. thorough loan appraisal and approval procedures). The institution is in the process of implementing its five-year strategic plan that focuses on efficiency of operations. Although GMFL is no longer the largest provider on the platform, it remains one of the most significant volume wise and still holds 25 % of MYC4’s loan portfolio. Similarly, MYC4 funding constitutes a large share of GMFL’s total portfolio and it is therefore mutually beneficial that the volume of uploads is kept relatively low for the time being.
The smallest provider on the platform, BELITA, has been having some challenges with its portfolio performance since the middle of last year. While new loan uploads are suspended, repayments continue to come through on a monthly basis. The outstanding loan balance (OLB) is now around €31,000, meaning that another €2,500 was returned to investors this month. BELITA is working on injecting more capital into the institution and remains committed to clear the arrears. So far, no BELITA loans have been defaulted on the MYC4 platform.
Premier Resource Consulting
Bad news this month as three PRC loans defaulted on the platform, namely Carnifresh Establishment, Nagee Ventures and Brain Box Limited, thereby making PRC’s default percentage increase from 2.57 to 3.78 %. PRC has been working with a local debt collector and a lawyer to follow up on the delinquent portfolio for a while, but this process is cumbersome and is progressing slowly. In the meantime, PRC has been asked by MYC4 to exercise the risk sharing agreement signed in 2010 which we should have more news on in next month’s update. The two batches of repayments received in Ghana in February is still in the process of being transferred back to MYC4 and investors.
For more details on PRC, see this blog post from December: Update on PRC
We were asked by some investors to include an update on BIRIMA this month. BIRIMA was founded by Youssou Ndour, the Grammy-winning musician from Senegal, and it joined the MYC4 platform back in 2008. Following the default of more than 60 % of its portfolio, BIRIMA was suspended from the MYC4 platform in 2010 and is considered to be part of MYC4’s old portfolio. So far, 21 % of the defaults have been recovered for investors, with the most recent round of recoveries being returned in December 2012. The case in Senegal was handed over to legal enforcement mid last year, following another breach of agreement by BIRIMA, and we are currently waiting for the outcome of this situation to be known in the next couple of months. We will make sure to post here on the blog as soon as we have some news to share.
Check back in the last week of April for the next provider update.