Kiva is the winner

As you might know in the past few months I have been trying both myc4 and Kiva. The situation on myc4 is somehow confusing to me. For instance here the MFI in question tried to explain some of the issue with out of the ordinary projects (DJ’s in africa asking 10,000 Euro plus each for identical needs, farming projects with the identical cow on the background) but to me the explanations are not plausible.

On Kiva I have just received my first repayments – it was really quick and I could now re-use some of the capital for other loans. If you are curious you can see my Kiva page here.

True: on Kiva you do not earn any interest. But at least the rules of the game are clear from day 1 and there is no illusion. On Myc4 investors are supposed to receive interests but, if you cut the currency risk and expenses your likehood to make a profit is, to say the least, low.  Additionally, the loan is offered at fairly high rates. I have discussed this on the myc4 forum and I stil can’t figure out why, given that the investors carries both the default and currency risk, is the least paid in this game.

On Kiva the money are offered to the MFI without any interest and this is certainly a plus. Kiva is not making a profit on my investment – nor am I – but we do help the MFI (local partners) to develop their infrastructure. In any case the final entrepreneur is paying and interest but possibly a lower one. Another issue on myc4 is a substantial default of 388,000 Euro in Ivory Coast. This will be paid by Myc4 itself but – in a what if scenario – what if other MFI’s will be in a similar situation ?

What I dislike the most is the loan size: too many are over 10,000 Euro and Myc4 seems to promote the “missing middle”. To me this is not middle: this size is similar to the ones we can find in the development world. It is not microfinance.

On Kiva there is a cap of approximately 1500$ per loan. This is very healthy and appropriate.
To summarize: I feel that on MYC4, given the loan size and confusion, investor are likely to register a loss. The currency risk in countries as Africa is not something trivial. The overall timing of a loan and reporting is done at a fairly slow pace.

Kiva is recommended for these people wishing to make a change with as little as 25$. If you are looking for bigger investments you can visit my microfinance investment page . There you can find excellent opportunity that do not ask to to bear both the default and currency risk with little or no guarantees.



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