Development Ratings

MYC4 is an online platform that allows individuals to make loans to small and medium sized businesses in Africa, focusing initially on Uganda and now present in seven African countries. Users participate in auctions by bidding the amount they wish to lend and the interest rate they would like to earn in order to fund the projects posted by the entrepreneurs. This makes MYC4 similar to platforms such as Prosper in the US which has 400,000 members and which has generated $92m worth of loans and Zopa which has 170,000 members in the UK. Kiva is MYC4’s closest comparator in terms of allowing users to lend directly to projects in developing countries. However, Kiva does not allow users to generate returns on their loans. For MYC4, loans range from EUR5 – EUR35,000 and the rate of return achievable on each project is in most cases commensurate with the risk of investing in it. The investment process is based on a Dutch auction principle, which basically means that the more investors interested in investing in a specific African business, the more favorable the terms this entrepreneur will obtain.

Investment projects are selected by a network of local providers. The providers ensure that due diligence and impact assessment is carried out on each individual opportunity. MYC4 pays the providers a fee to source the opportunities only when the loans are fully repaid to incentivise that high quality borrowers are found.

The investment opportunities range from micro-type loans to individuals and communities in poor/rural areas to loans to established businesses.

Alongside the financial opportunities, MYC4 has also created a platform for sharing knowledge, competences, ideas and best practices. This is done through the creation of an online forum where various topics are discussed and debated in specific chat rooms. A blog space has also been created where users can talk about personal experiences, the bidding process, other opportunities etc. This knowledge sharing space provides access to a social network as well as to capital.