MYC4 experiment

To continue my experiment I have made the following five bids on

I) Godfry, Mechanical Services, Uganda
II) Tropical Diagnostic, Ghana

III)Annet, Veterinary Shop, Uganda
IV) Joyce, Retail Store, Uganda
V) Asuma, Tailoring, Uganda

Feel free to click on the links to see the whole project.

On MyC4 you act as a real microlender meaning:

a) you have to charge an interest rate;
b) you are responsible for the currency risk (the loan is disboursed in local currencies and if you do not charge an appropriate interest rate you will almost certainly end up losing money);
c)Defaults exsit but MyC4 is very transparent and gives you all the information to make an appropriate decision like the value at risk for a given MFI,the collateral, and the number of defaults from a given provider;

It works as a dutch auction so the best offer will be included in the final loan.
The profit you make through the interests is subject to the local withholding tax (here things get a bit complicated but myc4 goes to a great length in explaining how this works and calculates/deducts this for you).

From a pure feel good prospective Kiva gives you a more immediate satisfaction. MyC4 has a different learning curve and requires an higher degree of homework. This said the total amount of money invested through their platform is fairly impressive.

What I found very interesting in myc4 is that the lender can gain a better understanding of how coomplex the work of a microbanker can be. Not only you need to make a judgement on a particular project but also take into account currency hedging and taxation. Obviously this is not an issue on Kiva as it is a not for profit. MyC4 does charge fees and so does the local partner (this is however very well explained on the loan information).

Obviously this model can be subject to critics: microplace seems much more straightforward but the comparision isn’t really doable as MYC4 accepts investors from virtually every country (but US) and microplace is active solely in the US.

MYC4 might not be for everyone – but it has an interesting model. More information about myc4 are also available on this Guardian article.

As Kiva is still looking to publish more loans – just a few at the moment – I am experimenting myc4 and other platforms too. ! I will keep you posted.

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