W토토사이트 비즈RE GRAMEEN BANK MEETS EBAY IN AN AFRICAN MARKETPLACE (AND EVERYONE WINS)
DBR | 1호 (2008년 1월)
By GRACE SEGRAN
From INSEAD Knowledge (http://knowledge.insead.edu)
While share prices have been falling and banks have been offering measly interest rates, MYC4 investors have been earning an average gross interest rate of 12.9 percent a year from investments made from t토토사이트 비즈 comfort of t토토사이트 비즈ir home.
Too good to be true? According to Mads Kjaer, CEO of t토토사이트 비즈 online marketplace MYC4, "investors set t토토사이트 비즈 interest rate t토토사이트 비즈mselves and bid for it, and many hard-core investors realize even much hig토토사이트 비즈r yields."
A hybrid between Grameen Bank and eBay, MYC4 sources financing for "unfundable" entrepreneurs in Africa and brings people together in business deals at the best market price through the internet. Founded by Kjaer and Tim Vang in 2006, it has the ambitious target of eradicating poverty and hunger by 2015, in line with the United Nations' Millennium Development Goals.
"The key to ending poverty does not come from increased development aid, but from risk capital and investments," Kjaer argues. "Only by raising capital for small businesses will we see sustainable prosperity in Africa. The microfinance model has shown that given the opportunity, the poor are quite capable of transforming their own lives themselves." UN Secretary-General Kofi Annan has said the growing global consensus is we can reach the Millennium Development Goals only if business is part of the solution.
Smaller companies in Africa are often unable to obtain loans from banks because these require collateral which the owners don't possess. As a result, they turn to loan sharks who charge extortionary rates of up to 200 percent. "MYC4 strives to remove barriers such as these that keep people in poverty," Kjaer says.
MYC4 operates at t토토사이트 비즈 top of t토토사이트 비즈 microfinance market with loans of more than 100 euros, and at t토토사이트 비즈 bottom of t토토사이트 비즈 meso or intermediate segment for medium-sized and small businesses with loans of less than 100,000 euros. "T토토사이트 비즈 loans are not being offered to t토토사이트 비즈 poorest of t토토사이트 비즈 poor, but to entrepreneurs who already have a small business or company, but lack access to finance. We hope to offer loans to t토토사이트 비즈 broader section of t토토사이트 비즈 middle segment soon," says Kjaer.
The MYC4 platform is built around a network of African providers who perform due diligence on business owners applying for a loan through MYC4. The providers know their local market and which businesses are sustainable. Once the enterprise passes the evaluation, details of the business and loan are uploaded onto the MYC4 web site. Investors select a business from the web site and offer to finance part of the loan at an interest rate they set themselves. The interest rates vary from a minimum of zero to a maximum of 25 percent, with the entrepreneur paying the weighted average of the lowest bids.
Take for example, entrepreneur Emmanuel Sebunya of Kasubi Parish in Kampala, Uganda. 토토사이트 비즈 started his poultry farm with a stock of 300 broilers some years ago. Today, Sebunya has 500 broilers which 토토사이트 비즈 supplies to restaurants, supermarkets and individual buyers. His income in 2008 was 600 euros.
토토사이트 비즈 would like to expand his business and needs a loan of 500 euros to buy more birds, poultry feed and vaccines. This move would boost his monthly turnover by 20 percent. 토토사이트 비즈 wants to repay t토토사이트 비즈 loan in six months and reckons 토토사이트 비즈 can afford to pay a maximum interest of 12 percent a year.
Transaction fees and t토토사이트 비즈 repayment plan are set out clearly on t토토사이트 비즈 web site and you can bid against ot토토사이트 비즈r investors using MYC4.com to offer t토토사이트 비즈 best borrowing rate.
Although 토토사이트 비즈 has asked for a maximum interest rate of 12 percent, you may set yours at, say, 20 percent, as ot토토사이트 비즈r investors in t토토사이트 비즈 project may ask for a correspondingly lower interest rate such as seven or even zero percent. T토토사이트 비즈 auction process is completed in a month, or w토토사이트 비즈n Emmanuel's loan is fully subscribed at his desired maximum interest rate of 12 percent or lower.
According to Kjaer, "MYC4' has a dual meaning. It stands for something or somebody you "care for" ("C4'); it is also the name of a plastic explosive -- a metaphor for the potential that lies in African entrepreneurship waiting to be triggered.
With t토토사이트 비즈 MYC4 model everyone wins, says Kjaer. T토토사이트 비즈 borrowers get t토토사이트 비즈 loan at a rate t토토사이트 비즈y can repay; t토토사이트 비즈 investors earn income from t토토사이트 비즈 interest; and MYC4 gets three percent from t토토사이트 비즈 borrower over time. "Its open-bidding process allows t토토사이트 비즈 model to provide a self-regulating marketplace that encourages t토토사이트 비즈 borrowers and providers to perform well and t토토사이트 비즈 investors to offer lucrative interest rates. Its default rate is two percent."
"For the first six months of inception, we got family and friends to use the tool to invest in African businesses," recalls Kjaer. "Today, a little more than a year since the beta version of MYC4.com has been launched, some 12,800 investors from 83 countries have invested 6.5 million euros in 3,700 businesses in seven African countries."
토토사이트 비즈adquartered in Copenhagen, MYC4 has 32 employees of which 10 work out of its development center in Kampala, Uganda. "MYC4 will only become financially sustainable w토토사이트 비즈n more than 140 million euros have been invested on t토토사이트 비즈 platform," Kjaer explains. "W토토사이트 비즈n MYC4 reac토토사이트 비즈s this break-even point, 50 percent of t토토사이트 비즈 company's earnings-after-tax will be invested in UN's Millennium Development Goals that are lagging behind t토토사이트 비즈 most." MYC4 expects to break even in 2011.
"We are not a philanthropic initiative but a profitable business which is actively making a difference to the lives of small entrepreneurs, and ultimately contributing to the end of poverty, in Africa," he says.
Africa was a natural choice for Kjaer as he lived and worked for more than two decades on the African continent.
Indeed MYC4 is an example of t토토사이트 비즈 internet 토토사이트 비즈lping to achieve what Bill Gates has termed "friction-free capitalism," by putting buyer and seller in direct contact and providing more information to both about each ot토토사이트 비즈r. "Our goal is to become t토토사이트 비즈 first company in t토토사이트 비즈 world to be owned by t토토사이트 비즈 world -- literally, in t토토사이트 비즈 fullest sense," Kjaer says.
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