Kenya’s largest milk processors, Brookside Dairy, is targeting to recruit at least 10,000 new farmers in a bid to raise supply of milk, following a multi-billion shilling expansion that doubled its processing capacity.

According to Mr John Gethi, the Brookside general manager for milk procurement and extension services, the factory expansion included installation of a powder milk processing line which doubled the company’s daily raw milk intake capacity to 2 million litres.

Brookside invested Sh450 million in the powder milk processing facility and Sh680 million on the building that houses the plant. The milk processor plans to recruit farmers, especially those supplying milk to informal traders and competitors.

MYC4 Borrower, Grace

MYC4 Borrower, Grace.


Brookside is keen on recruiting new farmers from Eastern, Central, Rift Valley, Western and Coast areas. Brookside is banking on increased farm gate prices and prompt payment for deliveries to attract new farmers.

Brookside is the largest milk processor in the country with a market share of 44%. The company concluded the purchase of local milk processor Buzeki last year. Other acquisitions made by Brookside include Spinknit in 2013, Delemare and Ilara. Brookside also made publicly known its planned entry into Ethiopia and Nigeria.

The Kenyan informal milk market is large and Brookside wants to tap into this. It aims to provide dairy farmers with an assured market for their milk and consistently guarantee payment for all the milk delivered to them so as to empower dairy farmers.

This is great news for a lot of MYC4’s borrowers. Several of funded and open loans belong to borrowers in the dairy farming industry. One of the challenges that they face is ready and consistent market for their milk. With the increased farm gate prices and prompt payment that Brookside promises, we are optimistic that this will boost their businesses further.

Inspired by: http://www.businessdailyafrica.com/Corporate-News/Brookside-to-recruit-10-000-farmers/-/539550/2588322/-/bb2ua6/-/index.html


Mama Anne in her little shop in Kawangware, Nairobi

Mama Anne in her little shop in Kawangware, Nairobi

Kenya has posted one of Africa’s fastest growing domestic consumption rates, buoying the Fast Moving Consumer Goods (FMCG) market. Data compiled by Stratlink shows that the country’s domestic consumption grew by 33.6 per cent over the last 10 years, ranking fourth in Africa behind Angola, Egypt and Libya.

Companies dealing in fast moving consumer goods are set to enjoy improved fortunes this year driven by growing domestic consumption, research firm Stratlink Africa says. Businesses in the fast moving consumer goods sector can expect to see some of the gains rub off on their market performance this year according to the researcher’s January market update. There is an improved market driven by a growing middle class with higher spending power.

Fast-moving consumer goods or consumer packaged goods are products that are sold quickly and at relatively low cost. These goods have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Examples include non-durable goods such as soft drinks, toiletries, over-the-counter drugs, toys, processed foods and many other consumables.

Some fast moving consumer goods – such as meat, fruits and vegetables, dairy products, and baked goods—are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover rates.

Though the profit margin made on fast moving consumer products is relatively small (more so for retailers than the producers/suppliers), the goods are generally sold in large quantities; thus, the cumulative profit on such products can be substantial. Fast moving consumer goods is probably the most classic case of low margin and high volume business.

A large number of borrowers on MYC4 run businesses that deal with the sale of fast moving consumer goods. There has been an increase in loans for funding from December when demand for fast moving consumer goods is high. The high demand has continued this month of January as entrepreneurs predict that 2015 will be a good year to be in the consumer goods business.

Inspired by: http://www.businessdailyafrica.com/-/539552/2593578/-/cvvl3x/-/index.html

Here is the last quarterly portfolio performance update of the year 2014.

There were decline in disbursements in the quarter – meaning there were successive declines in each quarter this year. The disbursement figure for the fourth quarter (379,423 Euros) was achieved from only 3 partners; Premier Kenya accounted for 60% of disbursements in the quarter. The fraud situation at KEEF continued to have a big effect on the platform performance: (reduced liquidity on the platform due to non-remittance of repayments has far reaching consequences). Other contributory factors included the stopping of activities in two countries: Good news is that the portfolio in those two countries is being repaid well (Tujijenge Tanzania, Gatsby and Fanikiwa have fully cleared their portfolios; Tujijenge Uganda and Uganda Microcredit Foundation continue repaying their portfolios well. We now have a team that is actively identifying strong potential providers to add to the platform.

The portfolio at risk above 30 days (PAR30) closed the quarter at 18%, which seems (considering effect of defaults on PAR) an improvement compared to 54% in the previous quarter. The net defaults declined sharply in the quarter – from 4% the previous quarter to 13% as at end of the year. There was a high level of defaults in the quarter coming from two providers, 86% from KEEF in Kenya and the rest from Mtaji in Tanzania. Mtaji continues making monthly repayments – thus investors should get all their funds back as recoveries. The relationship with KEEF has turned adversarial, yet we will make the utmost effort to recover the portfolio. Remember default is the technical term for loans that are more than 180 days late – thus, whereas the possibility of full recovery is reduced, the term is not synonymous with loss of funds.

From an investor point of view, the overall net return is negative for the fourth quarter (-4.22%) on loans disbursed by the current providers* in the last five years. The figure is heavily affected by the defaults in the quarter; reduced repayments; lower bids due to competition for available opportunities.




Portfolio Performance – current providers* (click to enlarge)

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 through 3 providers, all in Kenya. Premier Kenya started well on retail loans on the platform and accounted for 60% of the disbursements in the quarter. The other portfolio was distributed among Yehu (12%) and Jubilant (28%).

The distribution of the funds can be seen in the graph below.



Disbursements in € per provider in Q4 2014
(click to enlarge)

Loans disbursed between Q2 2011 and Q4 2011 have experienced forex gain. Without factoring in defaults, the overall net result of 14 of the last 15 quarters – the exception still being Q3 2012 – continues to be positive seeing as interest earned covers losses on currency (see graphs below). There have been significant defaults in the quarter, and this has weighed very negatively on the returns.


Profit & Loss – current providers* (click to enlarge)


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

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 realised 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 €1.16 million in 2,932 active loans. This is a significant decline from the previous quarter’s €1.96 million. The defaults no longer form part of the OLB, and are a major factor in the declining OLB. Over 94% of the portfolio is concentrated in Kenya.

Remember that you can always monitor the development and performance of the portfolio in real-time by following this link: MYC4 Portfolio


* 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, and Uganda Microcredit Foundation Ltd,MYC4 East Africa, Premier Kenya.


Defaulting loans

In the recent past, we have had several loans defaulting on MYC4 from KEEF, Mtaji and Milango providers. These defaults are due to the following: The 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. KEEF was plagued by internal fraud amongst their loan officers. KEEF’s decision to stop all operations pending investigations as opposed to a professional audit by a forensic team as well as their lack of cooperation on MYC4 repayment matters. Mtaji are making repayments albeit slowly and with a decline in frequency.

In this blog post, we shall seek to give insight on defaults, how they occur, what they mean and the process of recovery.

MYC4 loans default on attaining 180 days late in repyments. Once loans default, they are no longer visible on your active portfolio. However, you can still view these loans.

To view which of your loans have defaulted:
1. Log into your account.
2. On the left side there are options, click on investments.
3. When you click on investments, more options come up, click on defaults.This will show you the loans that have defaulted.
At this point, the defaulted loans do not attract interest. Consequently, there is a drop in an investors’ account balance. At this point, the defaulted loans do not attract any interest. Nevertheless, investors still have a claim to their funds, which will stream into their accounts in the form of recoveries from the provider over a period of time. When loans default, providers are required to pay them in full on MYC4 – and then pursue recoveries from the borrowers: In pursuing recoveries of defaulted loans from the borrowers, the providers are free to enforce their rights to recover against collateral provided.

It is a requirement that providers take full responsibility for the MYC4 portfolio they are handling; and they have all signed 100% Risk Guarantee Agreements against defaults. To ensure that there will be sufficient liquidity to pay for the loans as they default, MYC4 demands that providers hold 15% of outstanding portfolio in liquid assets (Referred to as the Risk Guarantee Fund): industry standard (outer limit) for default rate in the microfinance industry is 2%. In the ordinary course of business, MYC4 loans default at a rate that providers are easily comfortable to pay the defaulted loans without having to dig into the Risk Guarantee Fund.
If the provider continues running as an institution, they are obligated to collect the outstanding funds and pay pack as recoveries to investors via MYC4. If the provider defaults or ceases running as an institution, MYC4 taps into the 15-20% Guarantee fund and channels these funds back to investors. Providers will normally only stop repaying in case of institutional collapse, whereby investors will only receive the 15-20% back, which the Provider has deposited under the Risk Guarantee agreement.
Many providers go through difficult periods where they manage to restructure and continue operations. MYC4 usually takes a constructive approach and tries to help the providers to survive. However, MYC4 does not allow re-scheduling of loans: Thus whereas a provider may decide to alter/ reschedule repayment agreements with their borrowers, on MYC4 the loans will continue appearing as defaulted on MYC4, even as the repayments are received.

MYC4 engages all avenues to ensure repayments are recovered and as such, even though the defaulting means that repayments are late, the funds will still come trickling in. For instance, in mid 2012, our Ghanaian provider at the time PRC lacked sufficient institutional capacity to handle follow ups on delinquent loans. PRC was consequently paused from uploading new loans to the platform in order to focus all efforts and resources on the management and monitoring of the loan portfolio. As intended the outstanding loan portfolio reduced steadily as loans were being repaid. However the pace of repayments slowed down and most of the outstanding principal had to be defaulted. Despite the default, repayments have been coming in, albeit at a slower pace. Recovery of their defaulted portfolio is over 70% now and the outstanding balance is almost fully repaid.

MYC4 would like to thank our investors for the unwavering support throughout most of year 2014. MYC4 is seeking all avenues to ensure safety of your investment and continued trust in the MYC4 Platform. The defaulting situation as pronounced by KEEF is both unfortunate and regrettable. MYC4 operations and processes have learnt a great deal from the KEEF situation. MYC4 therefore appreciates that the unsettling nature of the current situation and the anxiety that accompanies it. We request our investors to hold on as we seek solutions to the current concern. MYC4 is dedicated to improve our service to investors and to create more awareness on MYC4 processes and operational procedures. We are partners in this and we are working tirelessly to bring this matter to book. Your patience so far, is most appreciated. We are open to offer further clarity and continuously engage with you to your satisfaction and comfort.


How much money would you consider enough to convince you to drink a glass of water made from human faeces? 1000 euros? 10, 000 euros? Would you do it for free? Would you drink water that came from or near a sewer or any place laden with human waste? Would you do it if it was either that or dying from dehydration? Survivors of expeditions gone wrong have always told stories of how they survived until they could be rescued by drinking their own urine. You probably answered no, or rather no way to the first set of questions and yes or maybe to whether you would do it for survival purposes.

Unfortunately for many people in third world countries, it is not an option. According to a report released by the World Health Organisation (WHO) and UNICEF in 2013, data collected two years earlier showed that 2.5 billion people worldwide lacked improved sanitation facilities. It appears that there might be a positive development in the fight against poor sanitation.

Woman fetching water

Woman fetching water

Photo credit : howtoberichandhappy.com

Bill Gates has drunk a glass of water made from human faeces, to showcase technology he said could provide clean water in the developing world. In a video posted on his blog here http://www.gatesnotes.com/Development/Omniprocessor-From-Poop-to-Potable Mr. Gates watched as the human waste was fed into the processor before drinking the end product from a glass. “The water tasted as good as any I’ve had out of a bottle. And having studied the engineering behind it, I would happily drink it every day. It’s that safe.” Bill Gates.

Bill Gates drinks water processed from human waste

Bill Gates drinks water processed from human waste

Gates said he wanted to begin sending processing plants around the world after tests later this year. The project was welcomed by WaterAid, which said that it could particularly help in urban areas. According to WaterAid, some 748 million people worldwide lack clean drinking water. Gates went on to say that turning waste into drinking water and electricity was important because diseases caused by poor sanitation kill some 700, 000 children every year and they prevent many more from fully developing mentally and physically. If we can develop safe, affordable ways to get rid of human waste, we can prevent many of those deaths and help more children grow up healthy, said Gates.

“If we get it right, it will be a good example of how philanthropy can provide seed money that draws bright people to work on big problems, eventually creating a self-supporting industry. Our foundation is funding Janicki to do the development. It’s really amazing to see how they’ve embraced the work; founder Peter Janicki and his family have traveled to Africa and India multiple times so they can see the scope of the problem. Our goal is to make the processors cheap enough that entrepreneurs in low- and middle-income countries will want to invest in them and then start profitable waste-treatment businesses.” Bill Gates

“If the technology can be rolled out at a scale that makes it viable for small investors or entrepreneurs, then this could be a catalyst for changing the sanitation landscape,” said its sanitation technical support manager. – BBC

Peer to peer lending

Peer to peer lending

Photo credit : businessweek.com

How much do you really know about peer to peer lending? Did you know that peer to peer lending has become such a force to reckon with that the banking world is threatened? If you are trying to understand peer to peer lending for the first time or have a good grasp of it, this post will tell you more about it.

Peer-to-peer lending is commonly abbreviated as P2PL. It is the practice of lending money to unrelated individuals, without going through a traditional financial intermediary such as a bank or other traditional financial institution. Therefore, investors on the MYC4 platform are able to lend money to borrowers in Africa who they have never physically met or interacted with.

This lending takes place online on peer-to-peer lending companies’ websites using various different lending platforms. MYC4 is such a platform. The abbreviation “P2P” is generally used when discussing the peer-to-peer lending or investing industries.


Peer to peer lending


Photo credit : hacktrix.com

Most peer-to-peer loans are unsecured personal loans. They are made to an individual rather than a company. The interest rates are set by lenders who compete for the lowest rate on the reverse auction model; MYC4 uses the Dutch auction model where investors compete for the lowest interest rate.

Lenders/investors mitigate the individual risk that borrowers will not pay back the money they received by choosing which borrowers to lend to, and mitigate total risk by diversifying their investments among different borrowers. The MYC4 platform allows investors to choose which borrowers they would like to lend to, based on several parameters such as type of business, gender, industry, etc. MYC4 investors tend to be interested in socially conscious investing. Peer-to-peer lending offers the possibility of supporting the attempts of individuals to break free from high-rate debt, assist persons engaged in occupations or activities that are deemed moral and positive to the community, and avoid investment in persons employed in industries deemed immoral or detrimental to community

The lending intermediaries are for-profit businesses; they generate revenue by collecting a one-time fee on funded loans from borrowers and by assessing a loan servicing fee to investors (either a fixed amount annually or a percentage of the loan amount). MYC4 is a for profit company whose mission is to raise capital for African entrepreneurs via an online marketplace and become a significant tool in the fight to end extreme poverty. “Business must be for profit but profit must also be for a purpose.” Mads Kjaer, CEO of MYC4.

One of the factors that might be considered a disadvantage in peer to peer lending is that the lender’s investment in the loan is not protected by any government guarantee. Bankruptcy of the peer-to-peer lending company that facilitated the loan may also put a lender’s investment at risk. Companies in the industry have measures in place to mitigate these risks.

Ultimately, peer to peer lending has much more advantages than any perceived disadvantages it may have. Peer to peer provides a win-win situation for all parties involved. Because many of the services are automated, the intermediary companies can operate with lower overhead and can provide the service more cheaply than traditional financial institutions, so that borrowers may be able to borrow money at lower interest rates and lenders may be able to earn higher returns. Compared to stock markets, peer-to-peer lending tends to have both less volatility and less liquidity. One of the main advantages of person-to-person lending for MYC4 borrowers has been better rates than traditional bank rates can offer. MyC4 investors get to participate in eradicating poverty through micro-credit by raising capital for African entrepreneurs, hence having both a social and economic impact.

Happy New Year


Raise a toast to yesterday’s achievements and tomorrow’s brighter future!

MYC4 wishes you a Happy New Year! May the New Year bring us more wonderful opportunities to work together.
The MYC4 team.

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