Following the July update on KEEF that included a statement from KEEF CEO, Daniel Kimani, investors have requested for more details on the situation. This blog post intends to answer these questions share with you progress made so far. KEEF momentarily pended normal operations in the collection of repayment and issue of new loans, in order to investigate fraud charges against some of their loan officers. This resulted to slow or no repayments beyond the temporary 2 months’ halt of activities, as it has taken tremendous effort to get the groups back into a steady, monthly repayment pattern.. The team at KEEF is now focused on reactivating borrowers amidst rumors within the industry that the company may be struggling to remain afloat. While such rumors may slow down repayments, the new structures in place are more effective and yet deliberate in flagging anomalies in loan uptake and repayments. ,
The court case against the loan officer suspected to have initiated the fraud has seen several sessions in court. However, the slow pace at which the case is moving encourages us to
begin a normalization process rather than get held up by the pending outcome of the case. A key output from the MYC4 and KEEF recent engagements is the decision for KEEF to access credit that will be partially used to pay off the late installments that have accumulated since June. Upon receipt of this funding, KEEF will be able to drop their PAR 30 Days, to zero, and bounce back to offer new loans on the MYC4 platform. This is just one of the many decision areas implemented by KEEF to get the business back on track. We look forward to support KEEF as they re-start normal operations and counter the distrust in industry.
At MYC4, we appreciate that fraud automatically lends our providers to financial and reputational risks, among other risk types. We therefore work very closely with the Provider to establish quick ways back into main stream business. The return of KEEF on MYC4 platform is as a result of joint efforts, cooperation, and transparency by KEEF, MYC4, and our valued investors. We are looking at a two week lead time before KEEF is back on MYC4 platform. When this happens, we shall bank on your support to fund their new loans. The learning picked from this case will be used to improve our Investor Communications to ensure timeliness and speed of information sharing.
Uganda and Tanzania Providers
In June, MYC4 decided to stop lending activities in Uganda and Tanzania to concentrate on the Kenyan market. The Providers in the two countries were disappointed but appreciated the change in MYC4’s strategy for East Africa. Providers such as, Gatsby, Fanikiwa and Tujijenge, in Tanzania, expressed their wish to pay back their outstanding MYC4 loan balance over a period of few months. , Others, like UMF in Uganda, preferred to pay back to MYC4 as the loans matured. A third category, consisting of Mtaji and Tujijenge Uganda, requested for a structured repayment agreement over the next 12 months. Investors will therefore notice their loan repayments coming in at irregular intervals, yet some at later than scheduled. MYC4’s motivation is the commitment to meet all Providers with a solution within their capabilities as long as the full repayment of the outstanding portfolio is assured.
Premier Kenya Limited– a new, experienced MYC4 Provider in Kenya
This summer MYC4 was proud to extend our first wholesale loan to a Kenyan start-up MFI Premier Kenya Ltd. Start-up is, however, not a very precise description, since the team behind Premier is the same that built Micro Africa, a MYC4 Provider since 2008 that has successfully extended 2,639 MYC4 loans to Kenyan entrepreneurs. Since the start of operations in early 2014, Premier has already grown to 11 branch offices and 67 loan officers. They apply state-of-the-art modern technology in their loan methodology and administration, based on the new and highly efficient MAMBU MIS. Due to their fast growth rate, MYC4 and Premier agreed in September 2014, that Premier will also be offering retail loans on the MYC4 platform, the first of which were uploaded and funded within hours on October 13th. A warm welcome to Premier Kenya! We are confident that you will spot many loan opportunities from them going forward.
Loans on the platform
Many investors may have noticed the empty page whenever they visit the MYC4 platform to choose an African entrepreneur to support. This
regrettable situation is a combination of three things:
1. Our old Providers in Uganda and Tanzania stopped offering loans on the platform this summer when MYC4 decided to concentrate activities
in Kenya in order to penetrate the Kenyan market.
2. The process of identifying and screening new Providers in Kenya has to be thorough and precise. This requires additional resources at MYC4 East Africa
3. As there is a temporary surplus of capital on the Platform, loans fund very fast. Since we recently reduced the time for loans to remain open for bid after funding, the loans disappear a few hours after they have been uploaded
As we sign up new Providers in Kenya and more loans get uploaded, this will increase the time of bidding and availability of loans to bid. Until that happens, we request our investors to be patient.
To those investors who have concerns about the inactive fee which is applied to investors after 12 months without any bidding activity, we suggest that they make one bid on a loan (or activate autobid) as this will give them another 12 months window where the fee will not be applied.
New faces at MYC4 East Africa
Mid-October 2014, two new members of staff joined the MYC4 team in Nairobi – both of them with the mission to grow the activity in Kenya in the future: Dickson Momanyi and Julius Kasanga. Both have solid financial backgrounds and they are currently undergoing training in the MYC4 system before they can start supporting our existing Providers and sign on new ones. It is MYC4’s ambition to obtain nationwide coverage in Kenya and to channel loans to both micro- SME- and rural entrepreneurs within the next year.
Recognizing that MYC4 has not been living up to our investors’ and other stakeholders’ expectations when it comes to communication, MYC4 has decided to hire a Communications Officer at our Nairobi office. Caroline Mbugua will be in charge of investor communication; she is a communications graduate from Daystar University and will be updating the investors on the providers’ performance as well as other news items pertaining MYC4. MYC4 appreciates the support received from investors thus the need to prioritize communication.