photos: Jens Honoré
Illustration: Dietwee ontwerpers
MYC4
In the world's emerging economies micro, small and medium enterprises are great sources of innovation and growth. They account for over 60 percent of Gross Domestic Product (GDP) and 60 to 80 percent of employment. Yet, the necessary financing to allow these entrepreneurs to grow and scale up their business is often unavailable due to unattractive risk-return ratios, high transaction costs and non-collateralized capital.
These businesses fall within the so called "missing middle"; they are too small for commercial banks and international finance institutions and too big for microfinance institutions.
MYC4 targets the top end of microfinance and the lower end of the missing middle; mesofinance (generally loans between €2.000 and 100.000).
MYC4 is a Danish initiative with the aim to create wealth in Sub-Saharan Africa through business. MYC4 is an online investment platform where people, businesses and institutional investors can make loans to African entrepreneurs. From 2006 MYC4 has been building local capacity with organizations that can screen, enter into contracts and handle transactions with entrepreneurs. The platform was launched in May 2007. Click to see the current number of financed businesses and investors.
'MYC4' stands for something or somebody you care for. "C4" is also the name of a plastic explosive - a metaphor for the potential which lies in African entrepreneurship waiting to be triggered. With MYC4 everyone has the chance to become their own Mohammad Yunus, Bono or Bob Geldof.
Goals
- Focusing on the power of business as the driving force to create wealth by making capital available to African entrepreneurs;
- lowering interest rates for loans in Africa;
- making interest rates transparent;
- becoming the first company in the world to be owned by the world.
Background
MYC4 was founded in May 2006 as a joint venture between Mads Kjaer, Kjaer Group A/S and Tim Vang. Kjaer Group has been providing vehicles and automotive solutions to the international aid and development sector since 1962. They are active in 33 developing countries, most of which in Africa. Mads Kjaer was CEO of the organization until 2006, he has since then been devoted to developing MYC4.
MYC4 aims to contribute to the eradication of poverty by 2015 by promoting sustainable business in Africa and is inspired by the United Nations eight Millennium Development Goals (MDGs). MYC4 has chosen to focus on Africa as they are the furthest from reaching the MDGs. Through the online marketplace MYC4 will increase access to capital for MSME's as this is the single most critical factor for development of the private sector in sub-Saharan African countries.
Partners
Musketeers
The Musketeers are a key part of MYC4's strategy to become the preferred infrastructure to connect African people and countries with each other and with the world - combining business activities, access to capital at fair interest rates and know-how – in order to end poverty before 2015.
The Musketeers will be:
- main owners and co-founders;
- goodwill ambassadors for MYC4; c
- communicating that MYC4 is a tool to end poverty.
Investors
An investor can be located anywhere and is a person or organization who actively bids on the platform to make a (partial) loan to an entrepreneur. There are three different types of investors, private, businesses (CSR) and institutional investors, to mobilize large amounts of capital.
Provider/Lender
Lenders are local financial institutions that sign the loan contract between MYC4 and the entrepreneur; they carry out the monetary transactions in exchange for a fee.
Providers are local African organizations that identify, screen and select the entrepreneurs; they take responsibility for the performance of the loan and transfer all related information to MYC4 in exchange for a fee. Different organizations can offer MYC4 as a product. MYC4 relies on these partners to identify and conduct due diligence on local entrepreneurs. They are also responsible for reporting on repayments. These can be NGO's, microfinance institutions, consultancy firms and other non and for profit organizations.
Both Providers and Lenders earn an incentive based rate for their services.
Sustainability
MYC4 is a commercial entity with social values. MYC4 charges fees for providing the infrastructure that handles the transactions. The entrepreneur will be charged a flat fee of 2% of the amount of the loan, payable only when the loan is actually disbursed. When the loan is repaid, the entrepreneur pays an additional fee of 2% of the amount repaid on the basis of a declining balance. MYC4 aims to make its first profit in 2010. From then on MYC4 will invest 50% of the earnings after tax through MYC4's own marketplace.
Results up to now
- 2007 Was the year of proof of concept;
- 2008 was the year for proving the scalability of the model;
- click for the current info on the amount of investors, countries, businesses and interest rate.
The plans
- Investor Footprint: 2007 starting in Denmark and in 2008 adding license to operate and Advisory Boards in Sweden, Holland and Iceland. 2009 UK and Kenya and in 2010 another 2-4 countries;
- Africa footprint: 2007 starting in Uganda, Ivory Coast and Kenya and in 2008 another 4 countries started being Rwanda, Ghana, Senegal, Tanzania. 2009 will add 2-3 more countries and 2010 an additional 2-5 new countries in Africa;
- in the near future MYC4 intends to offer additional products such as loans with fixed interest rates;
- once MYC4 has proven that the loan model works and is sustainable, it will be introduced in the rest of the developing world.
Term
From January 2009
Investment
€ 1.340.000 in MYC4
€ 500.000 investing in African entrepreneurs through the platform
Visit www.MYC4.com and invest!