The number of African businesses looking for funding via MYC4 is growing by the day. In 2011, €2 million was disbursed to 1,160 businesses. In 2012, this number is expected to double.
45-year old John Gachii is looking for a small loan from myc4.com to grow his grocery business
MYC4 has so far disbursed loans worth +15m Euro to over 8,000 African SMEs. The performance of the MYC4 portfolio has been very good the past two years and availability of loans on the MYC4 platform is growing steadily month-by-month. To ensure that this trend continues and more businesses in Africa access the much needed funding, MYC4 is seeking Institutional Investors and other Socially Responsible Investors that want to utilize the opportunity to invest directly in African SMEs in an easy and efficient manner.
The outstanding portfolio on MYC4 is expected to increase from €1.25 million in January 2012 to €2.5 million by the end of 2012. This growth, primarily driven by the demand for funds by businesses in Africa, will require an addition € 1 million in new liquidity on the platform. Already, €150,000 has been committed and released by the largest institutional investor on the platform, The Way Forward.
To know more about the investment possibilities that the MYC4 platform holds, read and download our new Impact Investment document here: Investment Vehicle for SRI in Africa
Hi,
time for me to get a bit critical again
Generally speaking, I do of course support the idea of having institutional investors on MyC4 but in practice, right now I am having some serious concerns.
1. Of course, institutional investors don’t really need MyC4. They are big enough to talk to MFIs directly and there is little reason for them to go through an additional intermediary and actually this is of course the predominant model for MFI investment today. Which kind of makes one wonder about the motives to go through MyC4.
2. My bigger concern is what I see today.
Take this loan for example, it’s the latest one I bid for:
https://www.myc4.com/Invest/Loans/View/9801
With previous loans for the last months my strategy had been to go in with the asked-for interest rate and allow being bid down up to the 5% allowed.
However, I had to realize that there are institutional investors/funds (in this case MDG3 and MIF1) who go in at HIGHER rates than that which often resulted in me funding higher interest rates that these funds get.
On the other side – understandably – there seems to be almost nobody who’s going in at lower rates.
I don’t care that much if there are a few individual investors profiting from my lower bids but if it’s funds I start to have a problem so I now revised my investment strategy to in no case allow getting below the asked-for rate and starting higher, I do even consider to start bidding only at the highest rate offered by any of the funds.
All of this would not be an issue if the projects still would get funded, but as you can probably see with the one I posted above or the last one I tried to invest in ( https://www.myc4.com/Invest/Loans/View/9778 ) this is not the case.
Now I really wonder whether it would make more sense for the funds who usually make up a significant share of the loan amount (and as I understand both of the ones I mentioned are actually affiliated to MyC4) to use a bidding policy that at least makes it plausible that projects actually get funded and to have less focus on maximising the fund’s profit, after all, at least THEY are supposed to be here for the social benefit of the investment as well as the profit.
Cheers,
Joerg
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