October & November Provider Update

In this update, you can read about UMF,  KEEF,  Gatsby, BELITA, Micro Africa and SISDO. For previous updates, follow this link.

UGANDA MICROCREDIT FOUNDATION (UMF)

UMF became a partner of MYC4 in June 2013 and after a successful pilot evaluation conducted in October, the institution has been allowed to grow its portfolio on MYC4. UMF is having a steady and controlled growth on MYC4 and currently has an OLB of Euros 185,076 in 196 loans. The portfolio performance continues to be good and we are looking forward to funding more clients in Uganda through UMF.

 

KEEF

KEEF is currently the largest provider on MYC4 with an outstanding loan balance of Euros 544,357 in 1,086 clients. Due to the institution’s market niche and technology, it has the ability to serve large number of clients in a cost effective manner and boosts of a large agricultural portfolio at 53%. However, due to MYC4’s risk management policies, we are now working with the institution to limit their growth. The portfolio continues to perform well and repayments are received on a timely basis.

 

GMFL

Previously we reported that GMFL risk guarantee was increased to 20% due to performance issues. In the month of November 2013, the institution was paused from uploading loans due to the rising PAR. At the same time, the managing director left the organization with the board appointing the Operations Manager in an acting capacity. The board is searching for a suitable candidate and the position has already been advertised. The PAR has remained high but somewhat contained. The management has intensified collection efforts and we are seeing positive movement. However the institution remains paused until PAR and management issues are resolved. We however continue to receive timely repayments.

 

BELITA

BELITA was paused from uploading loans early 2013 and therefore for the most of the year, they have been working to repay the outstanding balance. Only 6 loans of Euro 1,375 are active and Euro 4,249 has been defaulted. The Risk guarantee fund is sufficient to pay for defaults and we are working with them to pay the defaulted amount and clear the outstanding portfolio. Once the OLB has been run down to zero, we shall conduct an assessment and decide on future collaboration with BELITA.

MICRO AFRICA LTD

Micro Africa continues to pay down their outstanding loan balance currently standing at Euro 82,125 held by 490 clients. We expect that the whole amount will have been completely paid off by quarter one 2014. The repayments continue to be received on time.

 

 

SISDO

In November, SISDO was paused from uploading due to late transfer of money to investors. The situation is being sorted out and we are noting significant improvements. MYC4 has therefore allowed SISDO to resume uploads.

Read Full Post »

Spot Checks Q1 2013

In the first quarter of 2013 we carried out spot checks on four of our partners. These were Gatsby Microfinance (Uganda), Tujijenge Uganda, Micro Kenya and KEEF. The partners had scores ranging from 4 to 8 out of 10. The spot check score forms part of the parameters that are used in overall risk rating on MYC4 (commonly referred to on MYC4 as the star rating, due to the five stars displayed on each provider profile). Subsequent action points are given for each provider, including measures such as pausing of loan uploads until certain issues are adequately addressed.

The spot check is a tool used by MYC4 bi-annually to verify that the data captured on MYC4 is accurate; and that the borrowers not only exist but are carrying out the businesses as detailed on the platform. Another objectives of the spot checks is to verify that the providers are carrying out best practice as laid down in their policies (MYC4 only engages with providers that demonstrate, during due diligence process, that they have sound risk management policies). Many will agree that, it is one thing to have good risk policies in the finest print, but consistently implementing the same requires a multiplicity of factors – including management commitment, staff motivation & ownership, adequate training, and a good incentive scheme. Thus from the aforementioned, there are two principal aspects: Adherence to MYC4 model; and implementation of risk management practices.

Over a period of time since 2010, we have seen tremendous improvement in adhering to best practice. Many of our partners have incorporated aspects that were not part of their routine into their overall risk management structures. Areas that have seen good improvements include loan assessment, collateral perfection, and documentation. We have also managed to enforce more strictly, adherence to the MYC4 model.

The MYC4 model basically requires that borrowers access the loan funds at exactly similar terms and conditions as stated on the MYC4 platform. Thus, for example, loan for Odeke Julius is lent on MYC4 at an effective interest rate (EIR) of 41.87% for 12 months with collateral of a motor vehicle: We expect during the spot check to find a properly appraised loan at same terms and with collateral adequately perfected. Repayments received from borrowers should also be entered on MYC4 system as and when received from the borrowers. Suffice to say that loan status on MYC4 should mirror the provider’s information system with regard to each loan on MYC4. The withholding tax must also be remitted to the tax authorities.

The grading of the four institutions was divided as follows
1. Adherence to MYC4 model
2. Implementation of sound risk management practices
i. Completeness of loan files
ii. Perfection of collateral
iii. Loan assessment and documentation
iv. Processing of loan repayments
v. Client visits

Gatsby Microfinance holds our biggest portfolio per provider (about 23% of our portfolio). It was thus refreshing and comforting that they achieved the highest score from the spot checks, 8 out of 10. Among the highlights were that they had adequate loan assessment and approval mechanisms which were well documented; collateral perfection was sufficiently and consistently done; business visits revealed businesses with capacity to meet loan obligations; and there was strong adherence to MYC4 model with regard to disbursement amounts, interest charged, borrower awareness and consent of MYC4. The concerns noted included that there was a gap in repayment processing on MYC4 resulting in loans being cleared in GMFL books whereas small balances were outstanding on MYC4. Other concerns were that MYC4 currently finances a big part of GMFL portfolio (30%) and as such GMFL is required to urgently diversify funding sources.

Tujijenge Uganda (TUG) holds about 4% of overall MYC4 portfolio, while MYC4 holds over 40% of its portfolio. About 99% of its portfolio comprises of short term group loans. The perception of positive impact among its borrowers is very high – as several of the borrowers visited (who can be classified as bottom of the pyramid) attributed their elevated level of income to TUG. TUG was found to have good assessment of groups; had good documentation; collateral mostly was group co-guarantee and the necessary guarantees were in place. The key concern with TUG was on adherence to MYC4 model, whereby it was established that there was quite a high degree of non-compliance (TUG mostly pre-funds the loans it uploads on MYC4 at predetermined interest rates). This informed their low score of 4 out of 10. Other concerns noted were on documentation especially of the approval process and referencing/ file retrieval. TUG has been paused from further uploads so as to address adherence to MYC4 model and also give way forward on diversification of loan funding.

KEEF (Kenya Entrepreneurship Empowerment Foundation) holds a significant part of overall MYC4 portfolio, about 17%, and the converse is even more significant with MYC4 financing about 27% of KEEF portfolio. KEEF has demonstrated commitment to following the MYC4 model, as there was no issue of prefunding that existed previously. Repayments processing was found not to be accurate and with room for improvement. Loan assessment was not well captured in the documentation on file. Collateral perfection was satisfactory. KEEF  generally has sound risk management principles and is complying with the MYC4 model. The omissions in loan documentation and lack of consistency in repayment processing have informed the average score KEEF scored 6 out of 10. Further growth of KEEF on MYC4 will be limited to ensure that MYC4 remains below 30% of overall KEEF portfolio.

Micro Kenya holds about 15% of MYC4 portfolio, while MYC4 holds below 5% of Micro Kenya portfolio. Micro Kenya is part of the Micro Africa group that has made a strategic decision to exit from MYC4 platform, after acquisition by Letshego of Botswana. Micro Kenya is to a large extent uploading freshly approved loans as per our pre-funding policy. However, the requirement for compliance is 100%, which has been violated. Over 90% of the loans funded through MYC4 have been through the group lending methodology. The loan appraisal and documentation were well documented. However, the loan documentation was not consistently and completely done as several loans did not have critical loan documents such as loan agreements. Compliance with MYC4 policies on other areas than pre-funding, was noted to be good.

The next round of spot checks will be carried out in this 2nd quarter on our partners in Tanzania.

Read Full Post »

April Provider Update

Another month has passed, another update is ready for you: here is the April Provider Update.

–

Micro Africa Ltd

This month we have some big news on Micro Africa. As we reported in the last update, Micro Africa Ltd has been acquired 100 % by Letshego Holdings Ltd, a financial services company from Botswana. In a board meeting last week, it was decided that Letshego will handle all of Micro Africa’s funding needs going forward. Consequently Micro Africa Ltd will exit as a provider on MYC4, meaning that no new loans will be uploaded for bidding. All outstanding loans will be repaying as planned.

For MYC4 it is naturally sad to say goodbye to one of the oldest and largest providers on the platform; at the same time, it is a great satisfaction to have witnessed and supported Micro Africa’s growth over the years, from being a small MFI with 4,200 borrowers to its current position as the largest credit only MFI in Kenya with more than 45,000 clients.

We will be back next week with more information on the exit, including a letter from Micro Africa.

–

Fanikiwa Microfinance Company Ltd

Fanikiwa Microfinance Company Ltd from Tanzania has now been a provider on the MYC4 platform for 2 months. The partnership with Fanikiwa has been impeccable so far, and more than €100,000 has already been disbursed to 64 individuals and groups. On the repayment side, investors have received around €3,000 without delays. The maximum outstanding loan balance (OLB) for the pilot has almost been reached, however, which is why Fanikiwa has had to slow down on the number of open loans. The volume is expected to increase following the pilot evaluation which is due in 1-2 months’ time.

–

SISDO

In April, we finally saw the return of SISDO to the platform with around 20 new loans opened for bidding. SISDO had been paused from uploading loans most of this year; first due to its pending pilot evaluation, and subsequently due to some operational challenges that led to performance issues. Now that SISDO is back, we expect to see a good deal of new loans in the coming months seeing as SISDO has the size and capacity to manage a larger loan portfolio on MYC4 than its current €140,000. It is consequently expected that SISDO will more or less double its MYC4 portfolio this quarter.

–

Premier Resource Consulting

The two batches of repayments, a total of €5,250, that had been pending transfer since February, were returned to investors in the month of April. This meant that three PRC loans became fully repaid, namely Bokass Susu Enterprise, Koranch Ventures, and ChrisBud Enterprise. A number of new repayments, totalling approximately €7,500, were registered on the MYC4 platform and they are now in the process of being transferred and returned to investors as well. There is not a lot to report on the coverage of the defaulted loans, unfortunately, except that it is expected of PRC that the first recoveries should be reflected on the MYC4 platform soon.

–

Growth Africa Ltd

The partnership with Growth Africa was terminated in 2011, and Micro Africa Ltd has since then been responsible for the Growth Africa portfolio. The final 9 active loans were defaulted in the last week of April which means that Growth Africa no longer has an outstanding balance on MYC4. These loans had been more than 90 % repaid by the borrowers, but it was necessary to default them to avoid further interest accumulation. Micro Africa is committed to continue handling the Growth Africa portfolio, and will be meeting with MYC4 Staff in May to review the progress of the collection efforts on the defaulted portfolio.

–

Those were all the news we had to share this month. If you want particular providers to be included in the monthly updates, let me know. You are also very welcome to follow me on twitter for more regular operational information, news, and interaction: twitter.com/githakurdahl

Read Full Post »

“Teach that man to fish”

It’s time for a new investor testimonial; below you can read some of Payam Samarghandis (investor since 2007) thoughts about MYC4 and what could be improved. When we contacted Payam Samarghandi, he immediately offered to help us out with a little interview.

 

Hi Payam, first of all thanks for participating, can you tell us a little about yourself and your motivation for using MYC4?
I am 22 years old, I live in Denmark and I’m studying law. What perhaps sets me apart from other people at my age is that I am very interested in society in general and the structure of this – and it was exactly because of this interest that I became aware of the existence of MYC4 a few years ago. Through MYC4, I can participate in building a sustainable Africa where it is the Africans themselves who serve as the engine for this. The idea that it is the private initiative, without help from government supported institutions, and that I can be part of an ambitious and long-term project to improve the living standards in Africa aroused my interest.

In contrast to the numerous donations given every year to aid, in the traditional way, here is a project that puts real demand on the recipients of contributions – a necessary requirement, which means that society grows and Africans learn to reflect independently.

The road to hell is often paved with good intentions, and no matter how controversial it may sound, I am of the opinion that aid which simply provides food on the table for a short time, maintains Africa at a stage where they always will depend on the West. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime”. This saying illustrates, in fact, my enthusiasm for MYC4 to the fullest.

If you could tell the readers on the blog about one single aspect in relation to MYC4, critical or positive, what would you highlight?

To me MYC4 is pure idealism. Although we have not yet seen the long-term impact of microloans, it indeed has much potential to it and if the full effect is achieved, this might likely be a small step towards something bigger.

What is the best (and worst) thing about MYC4?

Although MYC4 has increased the transparency, it may still discourage potential lenders that Africans have full disposal of your money. Many questions and hypothetical situations may arise and it may deter people from investing the amount that they had intended. Similarly, transparency can also be increased after you have provided the loan so that it accurately illustrates how much you have earned in return, exchange rate fluctuations, etc.

The positive aspect is that every citizen is given an opportunity to provide a unique support to Africa. The underlying idea and purpose with MYC4 is indeed something that I support.

One challenge for MYC4 is also to promote at a much larger scale so that the common citizen would have a better understanding as to the underlying idea behind MYC4, and hereby make it more well-known to provide microloans.

If you should present MYC4 to someone who had never heard about us before, what would you emphasize?

As mentioned previously: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Hopefully, this is the beginning of a general reconsideration of the question of how we in the best possibly way can provide help to Africa. All countries have been through crises, yet none of them have survived these without taking an initiative.

What do you consider as competitors/alternatives to MYC4?

In Denmark, just to mention one example, a fundraising for Africa takes place each year. This year alone more than 10 million Euro was donated; this money will be managed by various aid agencies and used to build schools, provide people with food and so forth. But what will the Africans have achieved when the money runs out? Will they be ready to support themselves? Imagine if a fraction of the annual millions could be lent through MYC4 in revolving funds. A challenge for MYC4 could thus be to target these fundraisings and channel some of the many millions in revolving funds to microloans.

What do you think MYC4 will look like in the future?

I think MYC4 will serve as a great marketplace for microloans, not only in East Africa, but also in other places in the world where it is needed. The demand to lend money will increase as the system is recommended in the population, and many businesses and investment funds will see the possibility of placing their money in microloans, while simultaneously building a strong social profile.

Do you have any ideas/ improvements for MYC4 that you would like to share with the readers and us?

I think MYC4 would benefit from working together with strong social profiles that will support and act as ambassadors. For people who don’t know much about MYC4, it can quickly discourage them that your money is being lent to people in a continent that is known for having a high degree of corruption. MYC4 must therefore ensure to communicate the safety of the system so as to encourage various investors and investment funds to use MYC4 as an investment vehicle in order to increase the living standards for the people in Africa.

Thank you to Payam for his inputs and opinions. And remember, I’m still only a click away if you want your story told: karl@myc4.com.

Read Full Post »

January Provider Update

This year we will introduce something slightly new on the blog, namely monthly updates with key information about the MYC4 providers. We will not cover all providers in each update, but rather select the ones where we have some news to share. Considering that this is the first update, however, we have included all the active providers below.

 

Micro Africa Ltd

Micro Africa Ltd (MAL) currently has a combined outstanding MYC4 loan portfolio of approximately €620,000 in three countries (Kenya, Uganda, and Rwanda) and has now become the biggest provider on the platform in terms of volume. MAL has furthermore the responsibility for the Growth Africa portfolio which has around €600 left in 4 active loans. The efforts to recover on the defaulted Growth Africa portfolio will continue after the active loans have been cleared. It is expected that MAL will further grow its portfolio on MYC4 in the coming months in all three countries of operation.

–

Tujijenge Tanzania Ltd

Last year, Tujijenge Tanzania grew its outstanding MYC4 portfolio from €75,000 in January to €300,000 in December. Despite a slow start to the year, it is expected that the growth will continue in 2013 and that Tujijenge Tanzania thereby will become one of the largest providers on the platform. This is a positive development considering that Tujijenge Tanzania is a well established institution with a proven track record on and off the platform; and furthermore that the country diversification of the overall MYC4 portfolio will be improved with more volume in Tanzania.

–

Yehu Microfinance Trust

Yehu has had a slow but good start on the platform since joining in June last year, and its outstanding MYC4 portfolio is currently close to €60,000 in 174 loans. The average size of Yehu’s loans is around €390 which is the smallest of all active MYC4 providers. It is therefore necessary for Yehu to have a large number of loans in order to build some volume. MYC4 has scheduled a pilot evaluation with Yehu next month where growth projections for this year will be determined. The expectation at this point is that Yehu will begin increasing its volume in the next couple of months, however more information will come once the evaluation has been completed.

–

Tujijenge Uganda Ltd

Tujijenge Uganda is one of the smaller providers on – and off – the MYC4 platform. The current outstanding MYC4 portfolio is around €90,000 where it has been more or less steady over the last 12 months. Tujijenge Uganda specialises in group loans in rural areas with a particular focus on women and youth. It was also a Tujijenge Uganda group that inspired the post Disability is not Inability here on the blog back in September. In terms of projections for this year, it is expected that Tujijenge Uganda will continue to upload loans for €15-20,000 per month and thereby maintain the current volume, or alternatively grow its portfolio slightly.

–

KEEF

When KEEF joined the platform in January last year, all growth expectations were quickly exceeded; its outstanding MYC4 loan portfolio reached €350,000 in less than 6 months and KEEF immediately became one of the largest providers on the platform. At the pilot evaluation in April last year, it was agreed that KEEF’s portfolio on MYC4 should remain below €350,000 until further notice to ensure that the institutional capacity could keep up with the portfolio growth. This week, MYC4 is carrying out the annual review at KEEF and we should therefore have more information to share in next month’s provider update.

–

SISDO

The newest provider on the MYC4 platform, SISDO, had a strong finish to 2012 with more than €180,000 disbursed in November and December alone. The current outstanding MYC4 portfolio is around €200,000 which was the maximum target for the pilot phase. MYC4 carried out the pilot evaluation a couple of weeks ago and we are now in the process of agreeing on the best way forward with SISDO. Once the evaluation has been finalised, SISDO is expected to resume uploads of new loans to the MYC4 platform.

 

Gatsby Microfinance Ltd

Gatsby Microfinance Ltd (GMFL) is the second largest provider on the platform in terms of volume, having only recently been overtaken by Micro Africa. While GMFL was previously holding more than 40 % of the overall MYC4 portfolio, its share has now come down to 25 % which is a very positive development in terms of provider diversification and risk. The size of GMFL’s portfolio on MYC4 has not changed much in absolute amounts, however, as it has stayed around €650,000 for the most part of 2012. It is expected that 2013 will be business as usual for GMFL on the MYC4 platform.

–

BELITA

BELITA is another small provider on – and off – the MYC4 platform, and since joining in November 2011 focus has been on slow and controlled growth. While BELITA had a good first 10 months as a MYC4 provider, the last couple of months have been relatively challenging in terms of performance. The portfolio at risk above 30 days (PAR30) started to increase back in September and since then BELITA and MYC4 have worked hard to get the loans back on track. While these challenges are being addressed, no new BELITA loans are being uploaded to the MYC4 platform.

–

Makao Mashinani Ltd

When Makao Mashinani Ltd (MML) became a MYC4 provider two years ago, expectations were high. MML has an innovative approach to providing low-cost housing for people moving out of slum areas and MYC4 was excited to be part of funding these loans. Unfortunately, MML only managed to upload four loans on the platform before it became clear that the partnership was premature; the pipeline of new loans was insufficient. It was therefore decided to do a slow exit with MML, meaning that the four loans are being repaid on a monthly basis (around €4,500 remain outstanding) while no new loans are uploaded.

–

Premier Resource Consulting

As we reported in an update last month, Premier Resource Consulting (PRC) is currently experiencing challenges in terms of institutional capacity and portfolio quality. No major improvements have been made since then in relation to the portfolio performance; however, the bundled repayment that had been pending in the MYC4 system since November did come through last week. The backlog of repayments which has been the source of frustration for investors over the last 4-5 months has thereby been cleared. We will be back with more information on PRC in next month’s provider update.

–

Growth Africa

MYC4 and Growth Africa mutually agreed to terminate the partnership approximately one and a half years ago when Growth Africa decided to exit the lending business. A handover agreement was then made with Micro Africa (MAL) who took over Growth Africa’s MYC4 portfolio. As mentioned above, MAL continues to manage this portfolio which at this point has less than €600 outstanding. Recoveries on defaulted loans will continue after the active portfolio has been cleared.

–

 

Read Full Post »

What love can lead to

Director of GrowthAfrica and his wife Patricia

Cherchez la femme!  The old French saying also applies when it comes to Johnni Kjelsgaard, founder and director of GrowthAfrica. Because it was a woman, Patricia Jumi, who got him to Africa and made him stay. Today they run a very successful business, GrowthAfrica in Nairobi.

GrowthAfrica is no longer in a partnership with MYC4 but they have been for a few years. – We felt that microfinance was not a sustainable business model for us, especially in the light of us not making a big enough positive impact on the borrowers, says Kjelsgaard.  Today we basically deal with connecting people from outside Africa, mainly Denmark and Scandinavia, with African entrepreneurs. We see ourselves as facilitators in order to create growth.

-And look at Kenya now.   Kenya could soon become a middle income country, the economy is good in spite of the foolish politicians. Just look at the traffic here! Imagine how good everything could be! But I’m an optimist, you have to be that in Kenya. But we have things in common – the Danes and the Kenyans – the humor and the temper, says Kjelsgaard.

He established Growth Africa in 2000 and was joined a couple of years later by Patricia. Before that he was a banker, in the military, studied economics at the University of Copenhagen and was the director of the world’s largest student driven organization, AIESEC with 70.000 members.  The world of IT is also a part of Kjelsgaards CV.

In Kenya he started with nothing after having been there for three and a half years.

-I saw a lot of opportunities even though it was a tough market. I looked up Danish companies who might be interested in Africa. Some of them were, and after a lot of meetings we got on our feet, because I had first mover advantage. To begin with we used a program sponsored by the Danish government (Danida), business to business, where you must have a local partner. GrowthAfrica is a sort of go-between and a guarantee that the local partner doesn’t disappear with the money. Foreign investors tend to be suspicious towards Kenya, but with our assistance and our way of constant communicating things go smoother, says Johnni Kjelsgaard.

To spot new opportunities he travels to Denmark about three times a year with his “sales speech”. And he must be doing something right, because GrowthAfrica is – in his own words – making really good progress. 13 people now work with GrowthAfrica.  No doubt in his mind that East Africa is the place to invest today.

– Of course I have heard all the praise about China, Vietnam and the other tiger economies. But things are changing. Look at the lion economies here now, and why settle for a third row seat in South East Asia, when you can sit in the front row here in Kenya?

Read Full Post »

Your whole business in a file cabinet

You can have your whole business in a file cabinet

What do you get when you put together a woman whose education is in computers and a man who’s into electronics?  You get a pharmaceutical business! Anyway, that’s what happened when John and Hilda Wanjohi joined forces and created Sofben Ethicals.

I visit Sofben Ethicals in its tiny office downtown Nairobi. It’s Mrs. Wanjohi who greets me, and I ask her if she’ll show me the premises. – This is it, she says and raises her arms and points to the walls. Okay, but where do you keep your stock, your supplies, I want to know.    – Right here, she says and pats the two steel file cabinets in the corner of the room.  New as I am in this business I realize, that you don’t need a posh office, a warehouse, secretary and what not to get going and start materializing your dream.

Mrs. Wanjohi pulls out the drawers. They contain all kinds of medicine and ointments: some is for skin allergy, some is gel for wounds. There’s medicine to improve fertility, antibiotics for infections, medicine for your muscles and to fight HIV. You name it. It’s John Wanjohi who does the travelling and buys their stock in Dubai and Egypt.

– We have really grown, says Hilda Wanjohi, we started out of nothing, no computer, nothing, and the little we had was in the car, so that we could get around easily. Today we have all this and three sales persons!

Sofben Ethicals began to grow for real in 2003, when the couple got in touch with micro finance.  The company has already repaid two loans from Growth Africa and MYC4. They are applying for a new one allowing them to buy more stock for their over 50 customers. And they’ll be back for more I’m told.

– We work hard, but competition is tough, and some of our customers are not so reliable when it comes to paying for our goods, even though we offer them good discounts. At the same time we must have everything in stock all the time.  Also I’d really like to learn more about medicine. But Growth Africa has been good for my husband and me, ordinary banks are not for folks like us, Mrs. Wanjohi tells me.

Sofben Ethicals is into both retail and wholesale, and the plan is to get bigger in the latter and to expand the business to outside Nairobi.

So far their business is providing the couple and their three children with a comfortable life outside the capital. The loan officer from Growth Africa who’s with me says that their business is good, but that their products are a bit on the expensive side, and that they need to do more marketing.

PS: Sofben Ethicals is a down to earth small time business as are so many in the developing countries. But the pharmaceutical industry as such is huge and influential and has often been criticized for exploiting the third world both with regards to prices and products. If you are interested in the subject and like John le Carré you should read his book “The Constant Gardener”, which takes place in Kenya.  Sounds boring? Naah, it’s a thriller and a love story as well, it has it all. Hereby highly recommended.

Read Full Post »

Micro Africa takes over Growth Africa’s portfolio

Following the decision by Growth Africa to exit the lending business, a handover agreement has been made with Micro Africa to take over the management of Growth Africa’s loan portfolio. The two institutions, who are based in the same office building in Nairobi, have been working closely together over the last three months to ensure a smooth transition for both borrowers, investors, and staff.

Micro Africa has been a provider on the MYC4 platform since 2008 and has disbursed more than 1.1 million euro through the MYC4 platform to borrowers in Kenya, Uganda and Rwanda. With a risk rating of 4.36 stars, Micro Africa is currently the best rated MYC4 provider.

From MYC4’s perspective, we are pleased with the agreed exit strategy and the professionalism shown by both institutions in this delicate process. Our team in Nairobi has been closely involved with the transition and will continue to support Micro Africa with the management of the portfolio in all ways possible.

Read Full Post »

Update on Growth Africa

It’s been a while since we last had open loans from Growth Africa on the MYC4 platform. So what have they been up to in the last couple of months?

Growth Africa has been busy re-strategising.

“We have been asking ourselves if what we do for our entrepreneurs is enough”, CEO Johnni Kjelsgaard explains. “What they need at least as much as access to capital is knowledge, exposure, a guiding hand and a critical friend, some thought-provoking events, managerial and practical tools, networking, and structured experience sharing with their peers. Initially we thought this could be done alongside providing loans – but upon testing this idea, we realised that the interests of those two sides of the business are misaligned.”

Growth Africa has therefore made the decision to exit the lending business to instead focus on enterprise development for SMEs. An appropriate exit plan for the current outstanding loan portfolio is in the process of being established.

Growth Africa and MYC4 have agreed to have an on-going dialogue to see if there could be a strategic fit again in the future.

Read Full Post »

Take a ride to a better future

 

 

Deonesios' plan is to have at least 20 vehicles

 

Setting up an appointment with taxidriver- and owner Deonesios Kamotho Gikunju turns out to be not so easy. He’s a busy man, and if you want to meet him for an interview you have to go where he goes. Business comes first. So I drive through most of Nairobi (which also isn’t easy, you have to be veeery patient). I find mr. Kamotho outside USIU, the United States International University in Kenya. He’s waiting for a customer, and he can squeeze in half an hour for me.

In a café he tells me his story.
– Listen, when I was a kid, I often had to stay away from school, because there was no money for the school fees. That’s bad, really bad. We were poor, so at a young age I decided that when I came of age I’d be my own boss. I don’t want my son, who is almost four years, to go through the same as I did, he says. Memories from his poor childhood don’t reflect in his face, which is one big smile all the time.

Deonesios Kamotho Gikunju, 32, already has two cabs, one he drives himself, and two other drivers take turns driving the other one around the clock. All thanks to his own determination and with the help of Growth Africa and MYC4, who have provided the loans for the cabs. And a third cab is on its way, a brand new Toyota at a price of 9.000 USD. But why stop there?

– No, no it doesn’t stop here, he says, I’m planning to have maybe 20 vehicles, some of them trucks, and I’ll get there with the help of Growth Africa and MYC4, believe me, because the transportation sector here in Kenya is booming. I count on having my first truck in between three and six years.

However small the business is there always has to be a business plan. His plan is to save up money, so that he can buy a small piece of land every year as an investment.
– I can buy it for 150.000 Kshs., and a year or two from now I can sell it for maybe 500.000 Kshs, says Deonesios, who started out borrowing money at another micro finance institution, but eventually they could not meet his need for funds, so he turned to Growth Africa, where he got his first loan late 2008.
– They have been good to me no doubt, but I think their interest is a bit steep, and the period over which I have to pay back is a little short, he says.

With me on this visit is Faith Wambua from the MYC4 office in Nairobi and a loan officer from Growth Africa . He assures me that Mr. Kamotho is a really good customer, who always has paid back in time. He is currently on his third loan. You can learn more about his business and loans here. His customer comes out from the university. It’s time for him to go.

I’m left with the good feeling that he and his son can rest assured, that there will be enough money for his school fees – and more.

Read Full Post »