Milango microfinance is experiencing challenges that have kept the provider from the MYC4 platform for under 4 months. However, our interactions so far indicate that the provider is ready to commence repayments for the MYC4 loans and is eager to return to the MYC4 platform on completion.
We were made aware of the existence of conflicts between management and the Board at Milango. Management and Board disagreed on the direction of the company and the shareholders resorted to settle the dispute in court. As a result, most borrowers are holding back on their repayments and taking advantage of the clear lack of management oversight.
As a business strategy, Milango relies heavily on group lending methodology; a strategy that is preferred due to its low default rates, compared to the individual lending approach. In group lending borrowers who are financially challenged form a group and pool their resources, borrowed or otherwise, into their individual and/or group-owned business. However, sometimes group lending methodology makes a business vulnerable when it faces an obstacle in normal operations because as disbursements falter so do repayments from borrowers. The model is promoted by group pressure and succinct management practices.
So far, Milango has submitted payments of approximately 2665 Euros. However this amount will not reflect in the investor accounts until all repayments that have fallen due, are cleared.
Our recent interactions with the Provider also reveal that Milango is restructuring in order to build an efficient business. They are reconciling shareholders to hasten the process of normalizing operations. They are also incorporating other shareholder functions into the board governance structure. To tie all these down, an Annual General Meeting (AGM) is scheduled for the 6th of December and a decision on a way forward is expected.
Meanwhile, in their quest to normalize operations, shareholders have injected new capital into the business to ensure the survival and growth of the business in the future. These funds will go towards disbursements. Since disbursement of loans bring about repayments, the provider appreciates that the sooner they resume normal business operations, the faster the repayments will begin to trickle in. We are aware of some loans that will soon fall due. Nonetheless, repayment of these loans is expected as agreed and according to schedule.
To this end, Milango is keen to normalize operations on their end, repay MYC4 loans and continue with our partnership. The restructuring of shareholder functions, the AGM for decision-making on the best way forward and injection of capital into the company by shareholders for normal business operations to resume, are key interventions worth counting on.