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Posts Tagged ‘Fanikiwa Micofinance Company Ltd’

KEEFKeef
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

A KEEF Borrower

A KEEF Borrower

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 Kenya22
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.

Dickson, Carol and Julius at the MYC4 Nairobi office

Dickson, Caroline and Julius at the MYC4 Nairobi office

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Below is an update of providers in the month of September.

Kenya Providers
Kenya providers paid a total of 67,271 Euros in the month of September, below is a break-down of which provider paid what and the general overview of their performance;

 

 

KEEFMilangoSisdoJubilant

 

 

 

 

 

 

 

KEEF –  is MYC4’s biggest provider with a significant share of our outstanding portfolio. We will update more specifically on the situation in a separate blog. In a nutshell, at the moment they are experiencing problems due to fraud by staff, and subsequent immediate action taken to address the fraud: The suspension of activity for a certain period to facilitate investigations meant that some repayments were skipped. We however remain optimistic that the situation will turn around – group meetings have now resumed.

Milango – This month saw Milango pay approximately 5,000 Euros. MYC4 suspended further uploads from them until they increase capitalization of the institution, and address issues. They are having disputes among key shareholders that are now in court of law. The OLB still stands at € 166,191.65 and the par 30 is at 79.17%. They have two grouped amounts totaling to about 15,000 Euros for which we are expecting payment.

SISDO –  is in the process of reconciling their records with MYC4s ; but in the meantime they have grouped the pay-off amount to clear their portfolio. This is expected to be received in October. SISDO management team has changed from the time of our initial engagement, and we hope to have positive discussions on re- engaging with MYC4.

YEHU – repaid a total of 60,494 Euros in the month of September, and has continued to upload loans every week. YEHU has potential to grow with MYC4 and MYC4 is therefore encouraging her to upload more on the platform. The current OLB is € 327,115.34 and has no loans on Par 30 and above.

Jubilant – so far has paid a total of 1,771 Euros and continues to pay on weekly basis. The pilot review for Jubilant has been done and they will have their limit increased. Their current OLB is €€ 80,608.66 and they currently have no loans on Par 30 and above.

Premier Kenya – MYC4 East Africa already had the wholesale loan disbursed to Premier Kenya for on-lending to their borrowers. We are pleased to have Premier Kenya on board now as a provider for the retail lending. Premier Kenya is growing well as it has good governance, good structures, and adequate capitalization.

Tanzania Providers

Tanzania providers repaid as depicted below.

 

 

MtajifanikiwaTanzania

 

 

 

 

 

 

 

 

 

Mtaji – repaid a total of 8,139.91 Euros in the month of September. The current OLB is € 80,958.26 and the par 30 still remains at 100%. .

Fanikiwa – repaid their entire portfolio to MYC4 in this month and MYC4 wishes them all the best in their endeavors.

Tujijenge Tanzania – repaid a total of 42,537.69 Euros in the month and they are in the process of reconciling their accounts so that they pay-off the entire amount by the end of October. The OLB currently stands € 49,071.90 with a par 30 of 53%.

Uganda Providers

Uganda providers repaid a total of 23,350.58 Euros in the month, below is a breakdown;

 

 

TUGumf

 

 

 

 

 

 

 

 

 

Tujijenge Uganda – repaid a total of 8,104.41 in the month and is expected to continue paying every week until the portfolio is fully repaid. The current OLB currently stands at € € 65,297.37 and par 30 is 70%

Uganda Microcredit Foundation – repaid a total of 15,246.17 Euros in the month. Their current OLB is € 78,568.39 and they have no loans on par 30 and above. A grouped amount of around 25,000 Euros was grouped and is expected in the month of October.

 

 

 

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The last day of June marked the final day of uploads from Uganda. Henceforth, our Uganda providers will join our Tanzania providers in winding down their portfolios. MYC4 continues to search for Providers in Kenya so as to grow its portfolio. Below is an update of all the providers.

Kenya Providers

Kenya will going forward be our country of focus. The microfinance market in Kenya is huge and stable: We will thus utilize our resources to maximizing on the market.

KEEFYehuMilangoSisdo

 

 

 

 

 

 

 

KEEF – The PAR 30 of KEEF has suddenly deteriorated on the MYC4 system hitting 45% by end of June. Repayments from KEEF were not remitted in the month of June, KEEF had incidences of fraud by staff that involved the field staff, in some cases in collusion with borrowers. They had thus temporarily suspended operations so as to undertake forensic investigations to determine the extent of the fraud. They have now resumed operations as they finalize the investigations. We have had several meetings with the management of KEEF to find the best solution for the current impasse. They have assured us of their commitment to MYC4 investors, and we have no reason to doubt their going concern and ability to rectify the current situation. We expect repayments to begin flowing in the month of July. KEEF has 11,398 Euro of repayments that they have collected from borrowers, passed the entries on the MYC4 platform, but are yet to transfer to MYC4. Their current OLB currently stands at € 828,593.96.

YEHU – has continued to grow and has a portfolio of € 298,084.27. They have capacity to grow more on MYC4 platform, given that MYC4 funding is less than 10% of their outstanding loan book. They have remained consistent in their uploads; disbursing 34,788 Euros and making repayments totaling to 33,314.44 Euros in the month of June, their Par 30 stands at 0.00% on the platform.

Milango – Milango had a very good start on MYC4, disbursing an average of 55,000 Euros in the last three months. Milango started repaying in June even as they have reached the required OLB for a provider in the pilot phase. Their current OLB stands at € 162,045.07 and the repayment made for the month of June Total to 1,947.51 Euros with more expected later this week, their Par 30 on the platform is 0.80% We expect limited growth on MYC4 in the month of July as we require them to diversify their funding base; including injection of fresh capital by their shareholders.

SISDO -Current Portfolio stands at € 45,079.97. They continue winding down their portfolio, and in the month of June they paid a total of 18,692.03 Euros, Par 30 is 0.36%

Tanzania Providers

Tanzania has 4 providers namely Tujijenge Tanzania, Fanikiwa, BELITA and Mtaji Credit Facility Ltd. The providers in Tanzania are winding down their portfolios under a new model of direct transfer to MYC4 account in Europe. This measure was caused by the sudden government cancellation of the license of our money transfer agent, INTL Global Currencies, to get money out of Tanzania. The model is more expensive for our partners, so they are doing the transfers bi-weekly.

 

MtajifanikiwaTanzaniaBelita

 

 

 

 

 

 

Mtaji – Mtaji has 32,253 Euro of repayments that they have collected from borrowers, passed the entries on the MYC4 platform, but are yet to transfer to MYC4. Their portfolio at risk on the platform has deteriorated,(72.14%), because we are not allowing them to enter any repayments into our system until they remit all unremitted funds. We are pursuing them to rectify the position at the earliest. The total amount of repayments received in June is 7,082.55 Euros and their total portfolio currently is € 80,958.26, which is net of the unremitted repayments.

Fanikiwa – Fanikiwa’s monthly repayments after we pulled out of Tanzania, have increased compared to the prior period. The month of June saw them repay 21,251.56 Euros, and they are expected to continue with the weekly repayment in July up to until they finish repaying the portfolio, the current portfolio stands at € 57,005.51. Their PAR 30 is currently 17% but they are addressing it through more regular reconciliation exercise.

Tujijenge Tanzania – currently has a portfolio of € 129,498.79 with  a Par 30 of 4.33% on MYC4 and the month of June saw them repay a total of 43,792.14 Euros. It is expected that they continue repaying in the month of July. They are expected to group and transfer repayments of about 40,000 Euros this week.

BELITA -– is currently repaying the defaulted portfolio, amounting to 4,068 Euros. BELITA has experienced liquidity management and collection challenges in the past, but are making good effort to repay their entire portfolio (So far they have repaid 77% of their defaulted portfolio. MYC4 is currently waiting for confirmation for an amount totaling to 636.87 Euros. MYC4 is expecting more repayment from BELITA in the month of July.

Uganda Provider
Uganda has 3 providers namely Uganda Micro-credit Limited,(UMF), Tujijenge Uganda (TUG) and Gatsby limited.

umfTUGGatsby

 

 

 

 

 

 

 

Tujijenge Uganda – Has a portfolio of € 80,815.44 and continue to remit repayments every week. For the month of June, TUG has paid a total of 11,194.33 Euros. They have no portfolio at risk more than 30 days.
Uganda Micro-credit Foundation – UMF did not upload any loans on MYC4 for the entire month of June: They have diversified their funding sources to plug the gap left by MYC4 exit of Uganda. They however have continued repaying and in June they repaid a total of 48,743.01 Euros. Their current OLB stands at € 166,848.09 and they have no portfolio at risk more than 30 days.

Gatsby -Has a portfolio of € 154,546.69 which they continue to repay every week. Gatsby repaid a total of 29,365 Euros in the month of June. Gatsby has indicated their desire to clear their entire portfolio with MYC4 at the end of July. Their portfolio at risk more than 30 days on the platform has remained a challenge, (33.60%): They are working to improve on collections from borrowers and reconciliation of repayments with the MYC4 platform.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Kenya Providers

We shall have a look at the providers in Kenya, these are KEEF, YEHU, Milango, SISDO and Microkenya.

YehuMAL_septKEEFSisdoMilango

 

 

 

 

 

YEHU has continued it’s positive trend on MYC4, the OLB has however dropped from €310,116 in April to €299,522 in May. YEHU’s uploaded €31,114 worth of loans in May. YEHU is expected to grow further in future as MYC4 is currently only 9% of their own total OLB.

KEEF is currently at the loan portfolio ceiling of the B provider (750,000 Euros as per the license limit). Hence uploads are currently paused till the OLB is within the class limit again.

MicroKenya who exited from MYC4 continues to repay their portfolio. Their current remaining OLB on MYC4 is € 2,412 and they are expected to continue repaying to the end.

SISDO also continue to repay their portfolio after the mutual decision to terminate the partnership in early 2014. Their OLB currently stands at €53,807 and their weekly repayments continue to be received regularly.

Milango is as expected about to attain the maximum OLB for a pilot provider which is €150,000 hence MYC4 is scheduling a pilot evaluation later in the month of June. Hereafter Milango will hopefully be given a go ahead to upload as much there is required for a C class provider (maximum of 350,000 Euros) depending on the pilot evaluation outcome and the requirement that their portfolio on MYC4 does not go beyond 30% of their outstanding portfolio.

Uganda Providers

In July MYC4 exits from Uganda, hence no loans from Uganda will be uploaded on the MYC4 platform from 1st July. Below is an update of how the providers are fairing on despite MYC4 plans to exit the Ugandan market.

TUGGatsbyumf

 

 

 

 

 

 

 

Tujijenge Uganda continues to upload loans every week, the repayments come in every week and they have continued they continue compliance with MYC4 policies, their current OLB stands at €67,055.

Gatsby was paused last year due to issues with the PAR 30 being too high, as well as other internal organizational challenges they were facing. So far they have continuously been transferring repayments, their OLB currently stands at €174,847.

Uganda Micro-credit Foundation occasionally uploads on MYC4, they have continued transferring repayments every week and their current OLB stands at  € 178,737.

 

Tanzania Providers

Providers from Tanzania were paused from uploading on MYC4 in April as MYC4 pulled out of the Tanzanian Market. Below is an update of how the providers fair on in terms of repayments, we look at;  Tujijenge Tanzania, Mtaji, Fanikiwa and BELITA.

TanzaniafanikiwaMtajiBelita

 

 

 

 

 

 

Tujijenge Tanzania had initial challenges with the new way of transferring repayments to MYC4 after INTL closed shop in Tanzania. However as of last week, they have started transferring and it is believed that they will continue on the same trend, Tujijenge’s portfolio now stands at €129,498.

Fanikiwa Microfinance company Limited has been transferring repayments in good time, however their PAR 30 has been high. They have been working on reducing it and it has now gone down from 50% to 13%. Fanikiwa’s OLB currently stands at  €67,373

Mtaji Micro-credit Facility has been having challenges with the new ways of transfering, it is believed that this will change soon, Mtaji’s current OLB is €80,958.

BELITA

Belita has fully paid the OLB, however they are now in the process of paying for the defaulted amount which amounts to €3770.61

 

Potential Providers

MYC4 has been searching for new providers in Kenya and at the moment there are two potential providers. These are;

REMU DTM Ltd – REMU Deposit Taking Microfinance Limited (REMU DTM) is a Kenyan micro finance company licensed by the Central Bank of Kenya under the Micro Finance Act and Regulations (2008). The due diligence has been done and and we are hoping to get started soon.

JUBILANT Kenya Ltd (JKL) – Jubilant is a Kenyan micro finance company based in Mombasa. It was incorporated on 11th May, 2012, it specializes in offering financial services to all the sectors targeting mainly the rural areas with the aim of unlocking the potential that lies in those areas. The effect of this will be improved livelihoods and subsequently wealth creation for borrowers. MYC4 is currently reviewing the Due diligence of Jubilant and will proceed with them subject to a positive outcome.

 

 

 

 

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Kenya Providers

Milangoyehu picSisdo pic

Milango‘s OLB currently stands at 86,758.22 Euros, and it continue to grow with more loans uploaded every week. MYC4 is currently working with Milango so that they can top up the risk guarantee to enable them upload more. If the current trend of uploads continues, then Milango’s pilot review may be done sooner than the six months pilot period. The month of April saw MYC4 disburse 59,216 Euros to Milango, which is a good growth sign.
YEHU continues to grow, a growth most welcome by MYC4 as it starts its focus on Kenyan providers. Also, YEHU portfolio is only 14% of MYC4’s total portfolio, hence there is more room for growth. YEHU’s current OLB is 303,901.63 Euros, and 21,541 Euros was disbursed in the month of April.
SISDO – MYC4 and SISDO have amicably decided to end the relationship. SISDO had been having challenges with the MYC4 model; and have furthermore have recently attracted a size-able amount of funding on fixed term from other funders in the region. SISDO will continue with weekly repayments to run down the portfolio.

Tanzania Providers

Belita picFMCL_augustMtaji_augustTTZ_july

 

As you are aware, MYC4 is closing shop in Tanzania, MYC4 therefore after consulting came up with a repayment strategy for its providers in Tanzania. These providers are to pay directly to the MYC4 foundation account, first, they have to negotiation for a good exchange rate from their prospective banks. The amount is thereafter processed in the MYC4 system and hence investors get their repayments. The providers have agreed to transfer the repayments twice every month so as to minimize on the transfer cost incurred. So far all the providers in Tanzania are trying their best to negotiate for the best rates from their banks and to also transfer the amounts without delay and some have succeeded and MYC4 hopes that the rest perfect the process as they become more familiar to it.

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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*

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

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

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*

Profit & Loss – current providers*

 

Net profit & loss (sum of interest, defaults less recoveries, and currency gains/losses) – 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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Here you have a chance to get to know one of our newest providers, Fanikiwa Microfinance Company Ltd, a little bit better. We have received the below progress update in which Fanikiwa describes in more detail the organisational re-design process that the institution has undergone in the last 5 months.

Fanikiwa

As a social for-profit business, Fanikiwa is aiming to provide high quality financial products and services to rural clients in Tanzania by use of technologies such as mobile money transfer systems or Android tablets to increase our profitability and improve our clients’ convenience to access those.

Over the last 5 months, Fanikiwa went through an Organisation Re-Design process, which aimed at reducing costs while keeping the core structures in place so that new funding could be invested in a high-quality portfolio to break-even in the first half of 2014. The necessary steps to reduce costs were successfully implemented and new funding was obtained.

In a nutshell, here some selected achievements:

  • We obtained a 1.25m USD loan from Gatsby Charitable Foundation (UK) which will help us to cover costs and grow the portfolio to break-even in the first half of 2014
  • Développement international Desjardins (DID, Canada) granted us 20,000 CAN to develop and implement an agricultural value chain loan product adapted to the needs of rural communities in Tanzania
  • Unfortunately, we had to retrench 20% of our personnel to reduce personnel expenses by 10%. We concluded this difficult process within only 2 months without any legal disputes
  • End of July we finalized moving Arusha and Dar branches as well as head office to new premises which cut down rent expenses by 55%
  • We sold assets worth 90m TZS to increase our cash position

Due to the Organisation Re-Design process, the Board of Directors of Fanikiwa made the strategic decision to focus on breaking-even to secure the future of the young MFI, and thereby to postpone the application for becoming a deposit-taking MFI until 2015. Since Mr Thaddeo Mashera, the current CEO, joined Fanikiwa in 2011 with the vision to drive the transformation of a credit-only to a deposit-taking MFI, the board and Mr Mashera decided amicably to part ways. Mr Mashera left Fanikiwa on 31st July 2013. The board appointed Mr Norbert Benker as Managing Director for the coming 12 months.

During the Organisation Re-Design process, the management team remained unchanged. Fact is that the fundamental core business of Fanikiwa is profitable and above world-wide industry standards: we have more demand than we can serve, and the money we give out comes back (low PAR). With the encouraging support of Gatsby Charitable Foundation, we will make good use of the funds available to break-even and grow Fanikiwa to a major player in the Tanzanian Microfinance market.

Fanikiwa Staff

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