Services (microfinance)

Little Progress in MYC4’s Recovery Attempts

wiseclerk

As reported in the past MYC4.com has serious operational problems making it an investment with negative ROI for the vast majority of lenders. MYC4 has taken measures to recover as much of the outstanding loan amounts as possible, but progress is very slow.

This is a quick update on the situation

Kenya / Provider Ebony:
The receivership has been in place for two months now, but has recovered only a small amount. The court case against Ebony Capital Ltd. is ongoing still awaiting a ruling. (see details)

Ivory Coast / Former providers Ivoire Credit and Notre Nation
The responsibility for collecting these loans has been turned over to TRIUM International in September 2009. In the 5 months since then TRIUM International collected 17,848 Euro. TRIUM has asked to be relieved of the contract as soon as possible (see details)

Senegal / Provider Birima
Repayments have been delayed. Birima cites technical problems and a bad economic situation in Senegal.

Uganda / Provider FED/CMC
FED seems to have the worst status. MYC4 reports that collections nearly stopped due to a lack of staff and  working capital. Borrowers are said towithhold repayments in speculation on a collapse of FED/CMC.
MYC4 has defined 10 action steps for March and April. (see details)

Continue reading →

Awe-Inspiring: Lender funded 23,079 Kiva Loans

wiseclerk

Today, when I funded 2 more Kiva loans, I stumbled across the profile of Laurent D, from Belgium, who has funded 23,079 Kiva loans in the last 3 years. On his profile he states “I love the idea of helping people reach their financial independence”. Well said. And I bow to the dedication of making that many loans.

This got me wondering if there are lenders with even larger portfolio’s funded? There isn’t any information on this in the Kiva stats section.

Update: After using queries at Kivadata.org, it looks to me, that LaurentD actually is the lender, who did the most loans on Kiva, with Good Dogg, from the US, following second with 17,077 loans.

Which P2P Lending Developments Happened in 2009 as Forecasted?

wiseclerk

In January I published my predictions for p2p lending trends in 2009. Now let’s see how good my crystal ball was. The black text is my original prediction, with the review added in green and yellow.

More competition and entering more national markets (probability 100%)
In many markets multiple p2p lending services will compete for the attention of lenders and borrowers. In other markets, where there is no national p2p lending service active yet (e.g. Canada, New Zealand), p2p lending will be introduced by the launch of a service. Possible candidates include Communitylend and Nexx.
It is hard to predict when the dormant US players (e.g. Prosper, Loanio) will overcome the regulatory hurdles and if that step is lasting.
The British market which has (compared to other markets) rather low regulatory barriers so far is dominated by a single player -  Zopa. I wonder if we’ll see the launch of a competitor there.

Multiple new services launched in 2009, e.g. Aqush in Japan, Sobralaen in Estonia, Uppspretta in Iceland as well as ill-fated Pertuity Direct in the US. Prosper reopened. The mentioned Communitylend and Nexx did not make it so far, though it looks like  Communitylend missed a launch in 2009 only by weeks. No competition in Britain for Zopa yet.

Boom of social lending services/p2p microfinance (probability 100%)
2008 saw the launch of Babyloan, Veecus and Wokai. Kiva funded more the 1 million US$ new loans in a single week in the end of December. The steep growth of Kiva, MyC4 and other services will continue and new p2p microfinance platforms will launch.

Kiva continued it’s enormous growth and popularity. Vittana and United Prosperity launched. For MYC4 it was a hard year with decreasing loan volumes. Continue reading →

In Bed with the Enemy? Kiva and the Chevron Grant

wiseclerk 1 Comment

100% of the money Kiva lenders loan goes to the borrowers via the MFIs. Kiva funds it’s operations by donations and grants. The list of corporate partners supporting Kiva is long and growing.

When Kiva announced that they received a 0.5 million US$ one-year grant from Chevron to assist with operational needs across the organization on the one hand that means that Kiva can continue to grow and pursue it’s vision.

On the other hand it did raise concerns with some lenders given the reputation of Chevron. The company is criticized of negligence of environmental risks on multiple accounts (example, example2 or see links in Wikipedia article). Many of the incidents occurred in countries where Kiva is now trying to help.

It’ easy to see why Chevron chose to assist the Kiva cause – it could improve their tarnished reputation and Kiva has a high visibility.

The issue is more on the Kiva side. Why did Kiva accept this grant from a very controversial sponsor? As hard as it must be to keep an organisation running solely on grants and donations – does the end always justify the means?

I am a fan of Kiva but I do have large doubts whether it was the right decision to accept this grant.

One lender in this discussion thread put it this way:

An organization that has human rights issues, donating to a group trying to empower humans.  Isn’t there something wrong with this picture?  What, is Chevron trying not to have nightmares when they put their head on their pillow at night, and Kiva is supposed to make them feel better maybe?  A good name for this partnership might be ‘sleeping with the enemy’ . . .

MYC4 Reduces Staff Due to Lack of Capital

wiseclerk 1 Comment

MYC4 has redefined it’s strategy and budget plans after it was unable to attract new funding from business angels as originally planned. Mads Kjaer, CEO and main shareholder has announced that he will invest 1.4 million Euro (approx. 2.1M US$) into the company in 2010. To reduces costs MYC4’s management has decided to conduct a collective termination of all employees’ contracts on Monday November 30 in order to renegotiate employment with all employees and give them the possibility of deciding what to do in the current situation with a three-month notice period.

Some employees have already decided to stay on board, just as the CEO and deputy CEO yesterday had their terminations withdrawn by the Board of Directors, which means that MYC4 will continue under the management of Mads Kjaer and Svend Toettrup.

For MYC4 2009 was an extremely difficult year as default rates of the loans of nearly all local providers peaked. Volume of new loans slowed to about a quarter of the high reached in mid-2008 as several providers were paused to evaluate/clear the situation.

The conflict with Ebony Capital Ltd., a provider in Kenya, reached new extremes. The legal battle led to a search of Ebony’s premises by the Criminal Investigation Department, Nairobi on Dec. 1st.

Furthermore MYC4 placed information adverts in a regional newspaper to encourage borrowers to make repayments on their loans directly to a MYC4 account instead to Ebony Capital Ltd. (picture of newspaper ad).

MYC4 even set up an information page directed at Ebony borrowers and linked it on its home page.

Given the circumstances 2010 will not be an easy year for MYC4, too.