Portfolio Performance 1st Quarter 2014

Here is the first quarter portfolio performance update of the year 2014.
The volume of loans disbursed in Q1 was significantly less than Q4 2013. In Q1 2014, a total of €764,506 in 978 loans was disbursed compared €1,014,000 Q4 2013. But when you compare Q1 2014 performance to a similar period in 2013, you will realize that 2014 was just slightly below 2013 performance (Total disbursements in Q1 2014 were €827,021). That said, the year begun rather sluggishly and most of our providers especially in Tanzania and Uganda struggled to produce loans throughout Q1. In Uganda, Gatsby remained paused throughout the quarter while Tujijenge Uganda did not come with any significant volumes.

In terms of quality, portfolio continues to be healthy with PAR 30 being 2.9% the by end of Q1. The net defaults remained below 1%. It is also positive to note that cancellations of open loans reduced from €29,156 in Q4 2014 to €7,896 in Q1 2014 although this can also be attributed to the fact that there were fewer loans on the platform.

The defaults for the quarter were €4826 in 4 loans (Gatsby (€4376 and BELITA €450). Gatsby has since paid off the defaulted amounts and we are working with BELITA to have the defaulted amounts paid off. From an investor point of view, the overall net return is again positive at 1.94 % 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: 1.9% for Q3 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.

Portfolio Performance – current providers*

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 8 providers, three in Kenya, three in Tanzania and two in Uganda. KEEF in Kenya was the most active in the quarter with 32% of the total disbursements, followed by YEHU and Tujijenge Tanzania with 15% each. The other significant ones were UMF in Uganda at 13% while Mtaji and Fanikiwa had 11% and 10% respectively. Tujijenge Uganda continues to bring low volumes and could only manage 3% of the total disbursements. Milango Financial Services (MFS) is our newest provider located in the coastal region of Kenya. MFS became a provider in the third week of March and accounted for 1% of total disbursements in the quarter. This portrays significant potential.

 

Disbursements per provider in Q1 2014

In terms of country performance, Kenya accounted for nearly half of the disbursements, Tanzania 36% while Uganda accounted for 15%. The poor performance of Uganda is largely attributed to pausing of Gatsby throughout the quarter and low volumes coming from Tujijenge Uganda.

Disbursements by Country

There were not a lot of changes in terms of the profit and loss. Currency losses continue to impact on the profit & loss but the overall net result has been consistently positive. The interest earned covers losses on currency and defaults (see graphs below). Losses associated with defaults are further covered by the Partner MFIs. Loans disbursed in 2013 & 2014 have not been affected that much by currency fluctuations, but considering that most of this portfolio is still outstanding; it is too soon to know how it will develop in the months ahead.

Profit & Loss – current providers*

 

Net profit & loss (sum of interest, defaults less recoveries, and currency gains/losses) – current providers*

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 realized currency gains or losses. The second graph shows the same figures as a net sum to give an easy overview quarter by quarter.

The total MYC4 portfolio closed the quarter with an outstanding loan balance (OLB) of €2.12 million in 4438 active loans. This is a decrease from the previous quarter’s €2.35 million, a decrease of 9.8%. With more providers coming on board in Q2, we expect the OLB to be on an upward trend again. 52% of the portfolio is concentrated in Kenya where KEEF is the largest provider; 24 % is held in Uganda where Gatsby is still holds the largest portion; and with 24% in Tanzania with Tujijenge Tanzania being the largest provider there.

At the end of Q4, +88,700 people had been influenced directly through 17, 954 businesses funded through MYC4. 82% of these businesses are informal and majority (61%) is owned by women. Business and farming loans continue to be the major funding areas accounting for 71% of the loans disbursed. Others include service, education, health 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 Ltd.

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Go visit, meet the staff!

Director Eric Naivasha, Credit Operations Manager Titus Kuria and Operations Assistant Faith Wambua

If you are a MYC4 investor or a wannabe or just plain interested in the world of finance – be it micro or otherwise – and if you happen to be in Nairobi, why not grab the opportunity to visit MYC4s office in the tranquil neighborhood of Kilimani, a mere 10-20-30 minute car ride from the city center depending on the traffic.

There you’ll meet Eric, Titus and Faith who together make up the entire staff at MYC4, Nairobi. They’d only be happy to welcome you for a chat and answer all the questions you may have.

Last year I spent a few weeks at the office writing testimonials from the borrowers for the blog. Being a somewhat laid back Scandinavian I showed up the first day wearing jeans and a polo shirt. Big mistake, huge! I looked like a hobo among serious stock brokers wearing suits with creases you could cut yourself on. But they were friendly and bore with me – and they will also be friendly with you!

The director is Eric Naivasha with a solid background in economics and micro finance. He has studied at the University of Zimbabwe and at Moi University, Nairobi and he has attended numerous courses in microfinance in several countries. He’s also a certified public accountant.

Asked where he would like to see MYC4 in ten years, Eric says: – A global company where citizens of the world participate in funding of businesses for growth in all corners of the world.

Among his many responsibilities is identification of potential providers, conducting due diligence of the providers and managing a healthy loan portfolio.

When Eric is not busy at work he likes motor sports, football – and singing!

Titus Kuria is credit operations manager and has been with MYC4 since October 2010. Before that he was a consultant in micro finance. He has a bachelor of commerce and is a certified public accountant. Titus’ job is to coordinate the providers and help them to manage the quality of the loans in the portfolio.

– I talk a lot with the providers e.g. about best practice in micro finance, and I’m always looking for new strong providers, says Titus.

In ten years Titus sees MYC4 as a more established and stronger institution with more products incl. wholesale lending.  – We’ll have a greater impact on society beyond provision of funds with our own social responsibilities. And we are in many more places in Africa, he says.

Among Titus’ hobbies are jogging and working out. He loves to travel Kenya with his family – and chocolate.

Then there’s Faith Wambua, it’s her second time around the office as she left in 2009 due to restructuring, but she returned April last year.

Faith monitors the loans and liaise with the partners, looks at defaults and train the partners in using the it-systems.

– I like the ideology of MYC4, says Faith. It’s simply a good idea to support the common man.   I think that in ten years’ time we’ll have offices all over Africa, and maybe I’ll be there somewhere at the top!

Faith has a diploma in project management and business management and hopes that she’ll soon begin studying for a CPA, certified public accountant.

Faith likes swimming, tennis and film – and reading motivational books and the bible.

Three very dedicated people staff the office in Nairobi. They’d welcome you anytime, so stop by and meet the staff.

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