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As we indicated in our previous post MYC4 sent out bulk SMSes/Text messages to go out to all individual MYC4/KEEF borrowers informing them of:

i.) the legal termination of the MYC4/KEEF contract
ii.) they are to make repayments directly to MYC4

The SMS in question read:

“Dear(borrower name)Pursuant to termination of the Loan Administration Contract between MYC4 and KEEF, we MYC4 wish to advise you personally that KEEF is no longer administering your loan and that your loan and you are not supposed to make any further payments through KEEF. Any payments made to KEEF after receipt of this notice will not be credited to your Loan Account.

(borrower name)Your Loan of Ksh. …….., advanced through and guaranteed by KEEF, is more than 180 days late. We demand that you pay your outstanding debt within the next 14 days, to avoid legal action to collect. Pay through paybill number 835801 and indicate your name as the account Id, in case of any queries kindly contact us through our Tel No. 0706546010 or visit our offices at Kilimani Business Centre on Kirichwa Road for further information”

 

As stated earlier, MYC4 has taken a Timeout on the uploads of new loans to borrowers in Kenya following a major dispute with one of our providers in Kenya, KEEF who have wrongfully decided to neglect their obligation to repay a large amount to MYC4 investors.
The following are the latest developments on the situation:
1.MYC4 had previously taken the matter to court, but legal counsel advised arbitration as the best way forward. Arbitration, especially in Kenya is bound to take a much shorter period compared with the regular court process that could drag on for years.
MYC4 has already legally terminated the contract with KEEF and filed for arbitration.
2. MYC4 has sent bulk SMSes/Text messages to go out to all individual MYC4/KEEF borrowers informing them of:
i.) the legal termination of the MYC4/KEEF contract
ii.) they are to make repayments directly to MYC4
iii.)the details of where to make the repayments
3. MYC4 is putting maximum effort on making recoveries and collecting delayed repayments from all respective providers.
There shall be more updates as the situation continues to unfold.
Thank you for your continued support.

 MYC4 logo - Copy

 

PRESS RELEASE

For Immediate Release 31 March 2015

KIAMBU MICROFINANCE KEEF DEFRAUDS INVESTORS KES.112 M

Nairobi, March 31, 2015: Today, MYC4 has announced the existence of fraud in one of its microfinance partners, Kenya Entrepreneurship Empowerment Foundation (KEEF). The Danish online lending platform, MYC4, claims that KEEF has defrauded Kes. 112 million in investor funds including accrued interest on the defaulted portfolio. A total of Kes. 245Million was mobilized for KEEF on the MYC4 platform by May 2014; and by August 2014, only Kes. 125Million had been received in repayments. “All engagements with KEEF have since failed and we are fearful that investments from citizens from 120 countries may have been embezzled by the Kiambu based microfinance institution,” says Mads Kjaer, CEO and Founder, MYC4.

MYC4 has claimed to have entered into a contractual agreement with KEEF in 2012 to fund small business in Kenya through the latter’s online lending platform. They further allege to have raised a red flag upon noticing an increase in defaulted amounts. In response to this, KEEF’s CEO, Daniel Kimani revealed that some of his staff members had been implicated in fraudulent matters and were under investigations by the police. Mr. Daniel assured MYC4 and its stakeholders that KEEF remained committed to the partnership.

“Rather than come clean with investors at MYC4, executives at KEEF falsely portrayed willingness to settle the balance,” said Mads Kjaer, CEO and Founder, MYC4.  “The false portrayal has threatened the integrity of MYC4 as a credible lending platform, and even more worrying, the commitment of Kenya’s microfinance industry to access financial services for their informal businesses. Kes. 112 million is no mean fete and we plan to purse it vigorously.” According to MYC4, KEEF’s conduct puts the MFI’s Board of Directors under uncertain light; its existence and functionality is questionable too.

According to MYC4, in addition to the Providers Loan Agreement, KEEF agreed to 100% guarantee borrowers by signing Guarantee and Indemnity Agreement that bound them to settle any defaulted loans. The Agreement stipulates that KEEF should remit the defaulted funds to MYC4 within 10 days after default. It is noted that when the loans first started to default in mid-2014 KEEF did not make any such settlement and since then the entire KEEF loan portfolio has defaulted.

Now MYC4 claims that they will halt activities in Kenya due to KEEF’s embezzlement. “Our experience with KEEF has revealed part of the nature of the microfinance industry in Kenya: there may be more individuals, masquerading as microfinance practitioners, but are using the profiles of unsuspecting entrepreneurs to source for funds to enrich themselves. Investors from more than 120 countries have lost Kes. 112 million in fraudulent dealings and many entrepreneurs in in Kenya’s informal sector will lack funds due to KEEF’s unprofessional conduct. In conclusion, MYC4 is warning potential and current entrepreneurs to be wary of such microfinance institutions.

About MYC4

MYC4 is an online lending platform founded in Denmark under the trade mark MYC4 A/S. The institution carries its operations through an online lending platform where investors from 120 countries across the world make bids to fund profiled entrepreneurs from Kenya. Entrepreneurs are profiled and uploaded by Microfinance Institutions in partnership with MYC4. These MFIs are referred to as providers. See the MYC4 lending process on www.myc4.com

As stated on the MYC4 platform at the moment it is, unfortunately, not possible to sign up or bid on loans as an investor on MYC4. This is due to MYC4’s decision to take a Timeout for uploads of new loans to borrowers in Kenya following a major dispute with one of our Provider partners in Kenya, KEEF, who have wrongfully decided to neglect their obligation to repay a large amount to MYC4 investors.

Until this situation has been normalized there will consequently be no Kenyan entrepreneurs benefiting from a loan through MYC4 and it makes no sense to allow existing or new investors to upload money which cannot benefit an African borrower.

In view of the fact that our investors are unable to bid on new loans, we have temporarily disabled the automatic inactivity fee until lending activities are restarted. Thank you for your continued support and for bearing with us.

Dear Stakeholders,
Unfortunately, MYC4 has been taken hostage by one of our Providers, KEEF, who had an internal fraud last summer and since then have not paid any of their clients’ loans on MYC4.
Nevertheless, KEEF continues to operate. This is the good aspect of the situation. The bad and reason for Time Out is that they are allegedly using the MYC4 investors funds to finance their activities and they claim that they have no obligations towards us.
It’s going to be an uphill battle with KEEF and as the sum outstanding is significant, nearly 900, 000 € plus interest since June. Understandably, MYC4 needs to utilize all available resources in our team for this.
Furthermore, KEEF have filed a claim in the court against MYC4 alleging that they have no obligations and went ahead to request that MYC4 be prohibited from communicating about them and the situation. We have taken legal counsel and will also prepare for criminal investigation of KEEF’s board and management for misuse and speculation of the investors funds. All contracts made between KEEF and MYC4 are very clear on this.
In parallel to this we have to recover the delayed payments from Uganda and Tanzania and also from Milango in Kenya. It all takes resources and as its our foremost priority to secure the investors of MYC4 funds we have taken this step for a Time Out.
Our team in Nairobi headed by Titus and Jes are doing all in their power to rectify the situation and the investors best interest.
Mads Kjaer
CEO & Co-founder

Below is an update on providers for the month of February.

Kenya Providers
Kenyan providers paid a total of 112,838.81 Euros in the month of February, below is a break-down of which provider paid what and the general overview of their performance;

KEEF –  Their PAR 30 currently stands at 62.0%. They hold a substantial amount of MYC4’s portfolio which defaulted a few months ago. There has been no cooperation from KEEF on all matters repayments for a while now. Attempts at talks to get them to honour their financial obligations have not borne fruit and MYC4 has sought legal action.

Keef

 

Milango – Their PAR 30 currently stands at 83.0 %. We received repayments from Milango amounting to Ksh 22,166.45 Euros. They are keen on their repayments and we have received another sum as recently as yesterday.

Milango

 

YEHU – Their PAR 30 currently stands at 0%. They made repayments amounting to 36,866.93 Euros. Yehu is doing well on and off the platform and their repayments are on track.

Yehu logo

 

Jubilant – Their PAR 30 currently stands at 0%. They made repayments amounting to 25,948.96 Euros. Jubilant is doing well on and off the platform and their repayments are on track.

Picture1

 

Premier Kenya – Their PAR 30 currently stands at 0%. They made repayments amounting to 53,805.43 Euros. We are also pleased to announce that we received the first repayment on Premier Kenya’s wholesale loan, a whole week earlier than the due date and at the end of their six month grace period on principal.

 

premier

Tanzania Providers

Tanzanian providers paid a total of 23,657.05 Euros in the month of February, below is a break-down of which provider paid what and the general overview of their performance;

Tanzania providers repaid as depicted below.

 

 

MtajiTanzania

 

 

 

 

 

 

 

 

 

Mtaji – Their PAR 30 currently stands at 0%. They made repayments amounting to 23,657.05. MYC4 recently entered into a  repayment agreement with Mtaji and the repayments are on track so far.

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

Uganda Providers

Uganda providers repaid a total of 9,892.30 Euros in the month, below is a breakdown;

 

 

TUGumf

 

 

 

 

 

 

 

 

 

Tujijenge Uganda -Their PAR 30 currently stands at 99.9%. They made repayments amounting to 9,892.30 Euros.

Uganda Microcredit Foundation – Their PAR 30 currently stands at 1.48%. We did not receive repayments from UMF for the month of February.

 

 

 

I have been to Kawangware several times, but still I can never find my way around. This suburb of Nairobi has its main roads, but once you leave them and step into to the maze of narrow alley ways you’re bound to get lost. It’s a breezy day in the dry season, and dust is in the air. In fact dust is everywhere, in your face, ears and nostrils. And on all the goods that are being sold here, vendors and shop keepers fight a hopeless struggle to keep the dust away. It seems that everybody is selling something, shops everywhere. Shops? Not necessarily shops as most people understand the concept: A room with windows, shelves and a door. Here a few square feet and a rough table is enough to set up shop. But there are also ordinary shops, you can get everything in Kawangware. The assortment can be limited, very limited. To mangos for example. Ah, the Kenyan mangos. My wife left for Denmark a week ago, she left half her clothes here and filled one side of her suitcase with the sweetest mangos on the planet.

I am my way to visit Elizabeth Waidhira, one of the shop owners.

Elizabeth, a MYC4 borrower at her Mpesa shop.

Elizabeth, a MYC4 borrower at her Mpesa shop.

With me are Caroline from MYC4’s office and branch manager Ezekiel from Premier Kenya. Elizabeth specializes in m-pesa, pesa meaning payment in Swahili, mobile payment, which is huge in Kenya, the country being a first mover in mobile payment. You’ll see m-pesa shops everywhere, also here and close to Elizabeth’s shop where people come to put money in their account. Actually she’s surrounded by other m-pesa shops, and I ask her, if it isn’t bad for her business.

– No, she says. Quite the contrary. Competition is good. That way you’ve got to be on your toes, it brings more customers! And on her toes she is this woman in her late forties and the mother of two and grandmother of one. She mentions her grandchild first, when I ask her about children. Obviously she’s proud and happy to be a grandmother. Working hours are from 7.30 AM till 6 PM. She has two employees in the little shop which also offers typing, photo copies and passport photos. Everybody has one weekly day off.

– Like with all people my life is up and down, says Elizabeth, whose husband works in the meat industry. – My mission is customer satisfaction! That’s the most important thing. If my customers are happy, I’m happy. I would also like to expand, I need more space. That’s my biggest challenge along with the dust, the rain and the mud.

She is on her first loan with Premier Kenya. It’s for 150.000 Kenyan Shillings (app. 1500 Euro). She didn’t spend it on her shop but on home improvement, a fence to be exact. She repays 15,500 Kshs a month and will be done with it in a year but doesn’t know if she wants a second one. It depends on the circumstances, and she finds the interest too high. I ask her if she thinks that she has a good life.

– Yes, I’m happy, I try to remember the good days.

Elizabeth (MYC4 borrower), Caroline (MYC4 Communication Officer) and Ezekiel (Premier Kenya Kawangware Branch Manager)

Elizabeth (MYC4 borrower), Caroline (MYC4 Communication Officer) and Ezekiel (Premier Kenya Kawangware Branch Manager)

We say goodbye to Elizabeth, so that she can get back to business. Ezekiel, Caroline and I walk back through the dusty streets to Premier Kenya’s office. It’s an experience to be here in Kawangware – every time, so lively and full of friendly people. Maybe you should visit next time you’re in Nairobi? I guarantee you’ll neither regret nor forget it.

We pass one of the mobile mango vendors, and I decide to do like my wife did. Leave some clothes behind and bring a sweet and tasteful part of Kenya with me back home.

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