Here is the second quarter portfolio performance update of the year 2014.
The volume of loans disbursed in Q2 2014 was significantly less compared to the disbursements done in Q1 this year. In Q2, a total of €566,253 in 867 loans was disbursed compared to €764,506 in Q1 2014. The decline in disbursements was anticipated owing to MYC4 being unable to disburse to Tanzania partners as from 1st of April this year. This was attributed to our partner INTL not being able to support MYC4’s cash management activities due to regulations in the country as per the beginning of the quarter.
In terms of quality, the portfolio has been stable in the period although the PAR 30 suffered a decline in the last few weeks of the quarter to close at 23%. This is largely attributed to some pending repayments from some Tanzania providers, Gatsby and KEEF. The net defaults remained below 1%. It is also positive to note that cancellation of loans reduced from €7,896 in Q1 2014 to €2,897 in Q2 2014. This figure is exclusive of €13,446 worth of loans to Tanzania which were pending disbursement but cancelled as a result of closing down disbursements to the country at the beginning of the quarter.
We had only one loan defaulting this quarter worth €570 from Fanikiwa. This defaulted loan has since been paid off. From an investor point of view, the overall net return is again positive at 1.87% on loans disbursed by the current providers* in the last four years. This is an indication of stability in overall net returns when looked at in the light of the last few quarters: 1.94% for Q1 2014, 1.9% for Q4 2013, 1.7% for Q3 2013, 1.6 % for Q2 2013, 1.5 % for Q1 2013, 1.7 % for Q4 2012 and 1.9 % for Q3 2012.
The Portfolio Performance Graph above shows the performance of loans disbursed since 2010 divided by quarter of disbursement. The colour blue shows funds that have already been repaid, green shows amounts that are being repaid on time, yellow indicates the balances on loans that are currently more than 30 days late, while red shows the net defaulted principal (i.e. defaulted principal less recoveries).
The disbursements were distributed among 5 providers, three in Kenya and two in Uganda. KEEF continued being the most active partner for the second consecutive quarter this year with 45% of the disbursements. This was followed by Milango, a new provider, at 27% and YEHU at 14%. The rest of the disbursements came from Uganda with Tujijenge Uganda accounting for 9% and UMF at 6%. The distribution of the funds can be seen in the graph below.
In terms of country performance, Kenya accounted for 86% of the disbursements in the quarter while Uganda took the remaining 14%. Milango’s aggressiveness on the platform in the first three months of uploading contributed significantly to Kenya’s total disbursements. Poor performance by Uganda is largely attributed to pausing of Gatsby throughout the quarter and low volumes from Tujijenge Uganda and UMF.
There were not a lot of changes in terms of profit and loss. Currency losses continue to impact on the profit and loss but the overall net result has been positive as far as the last seven quarters. The interest earned covers the losses on currency and defaults (see graphs below). Losses arising from defaults are further covered by the partner MFI. Loans disbursed in 2013 and 2014 have not been affected much by the currency fluctuations, however since most of this portfolio is still outstanding; it is too soon to know how the next few months will turn out.
The Profit & Loss graphs above show the current result on loans disbursed since 2010 divided by quarter of disbursement. In the first graph, the colour green shows the earned interest, the red indicates the net defaults (i.e. defaulted principal less recoveries), and the purple shows the net realised currency gains or losses. The second graph shows the same figures as a net sum to give an easy overview quarter by quarter.
The overall MYC4 portfolio closed the quarter with an outstanding balance (OLB) of 2.06 million in 4,837 active loans. This is a decrease from the previous quarter’s 2.12 million, a decrease of 5.4%. This is mainly attributable to the exit with Tanzania partners at the beginning of the quarter and Gatsby remaining paused throughout the quarter. With the funding of the wholesale loan and more providers coming on board in the coming quarters, we expect the OLB to be on an upward trend again; however in the short term, it will be affected by the exit with Tanzania and July exit with Uganda partners since they will only be repaying. The biggest portion of the portfolio is concentrated in Kenya at 67%, where KEEF is the largest provider; 20% is held in Uganda where Gatsby and UMF hold the biggest share; and 13% in Tanzania with Tujijenge Tanzania being the largest provider there.
At the end of Q4, over 93,200 people had been influenced directly through 18,794 businesses funded through MYC4. 84% of these businesses are informal and majority (62%) are owned by women. Business and farming loans continue to dominate the platform accounting for 71% of the loans disbursed. Other include service, health, education, transportation and renewable energy loans.
* Current Providers: GrowthAfrica, Gatsby Microfinance Ltd, Micro Africa Ltd, Premier Resource Consulting, Tujijenge Tanzania, Fusion Capital Ltd, Makao Mashinani Ltd, Tujijenge Uganda, BELITA, KEEF, Yehu Microfinance Trust, SISDO, Fanikiwa Microfinance Company Ltd., Mtaji Credit Facility Ltd, Uganda Microcredit Foundation Ltd and Milango Financial Services.