Post: New Partner: AE&I

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avatar image MYC4 STAFF
Level 6
  New Partner: AE&I
Posted 04.05.2010 11:49 CET

Dear all,
As Mille wrote I have been in charge of the due diligence performed on AE&I and can elaborate on the case based on the questions raised by S. Lennarsson. I find it completely normal that investors have sceptical and cautious considering the very unfortunate debut MYC4 has in Côte d'Ivoire when we started up here in the autimn of 2007 (Ivoire Credit and Notre Nation), but I also believe that the issues we have experienced have been more tied to the choice of partners than to the country, and that borrowers in Côte d'Ivoire also deserve a new chance to access MYC4 loans.

MYC4 has actually followed AE& over 2 years from the time when they were ranked as the 16th best performing MFI by the mix in 2007. We have thus been able to also see the progress they made in setting up their new IT system and getting their organization consolidated and trained, so this is in no way a "rush" decision.

Most of S. Lennartsson's comments refer to a situation at AE&I more than 2 years ago when the company had an IT crash and a relatively small organization, and to address the two specific questions I can inform about the situation as of today (May 2010):

a) Financed by a grant from Bill and Melinda Gates Foundation channeled through AE&I's shareholder Africap AE&I have implemented the IT systems, Bankers Realm from Croft Silicon, which is considered top of the line in MFI software. The system was implemented in the second half of 2008 and is now fully operational in all 7 branches, except for the POS (Point of Sales)  handheld terminals which will reduce administrative time in the field considerably and which is expected implemented in June 2010.

b)The dependance on the founder, shareholder and CEO, Fahan Bamba, has decreased as the organization has grown. Of the ca. 75 people staff 57 are credit officers operating in the field. In August 2009, Alain Agnipke, a specialist in West African Microfinance and founder of the MFI school in Benin, joined AE&I as COO and is in charge of daily operations today. Alain was hired with the support of the World bank supported organization, AMSCO, an organization specializing in finding and hiring of qualified staff for businesses in Africa. But also on different other positions there are very qualified people at AE&I today. The only area which they lack is English speaking competences which they are in the process of hiring to communicate on the MYC4 platform.

Regarding the Microfinance market in Côte d'Ivoire AE&I have shared with us a detailed market analysis which is the foundation of their business plan and strategy. Whereas I am not entitled to share all details in this Forum I can give you a brief profile of the market in CI which represents an enourmous potential as it is vastly underserved:

There is a legal framework under the Minstry of Finance governing the MF market in CI. However, the market is underdeveloped and conisist mainly of more than 120 small cooperative MFI's with very little or no capital available. Amongst these there is one coop called COPEC, which has a 95% market share and which has been operating with a loss and negative equity for years (bailed out by the state). The private sector MFI was non existant up till recently but just after the war in 2005 a number of private MFIs started up to serve the largely untapped market and today there are a handful of private MFI's with reasonable growth and size - AE&I being one of them. The CI Government is very much encouraging the growth of the sector and last year hosted an international conference to identify both donors, capacity building supporters and other MFI infrastructure services to launch a new drive for the sector. I am not sure how successful they were but the Prize # 1 granted to AE&I in December 2009 (see below video) by the Mininstry and UNDP is most likely part of that initiative.

In conclusion, it is my impression that AE&I is in the front of the modernaization of Microfinance in Côte d'Ivoire and giving them a chance of access funding via MYC4, first through a limited scale pilot over this summer, will give them and MYC4 investors a chance to get acquianted and find out if investing in their entrepreneurs offers other advantages than the absense of currency risk linked to the CFA countries.

I hope you will be there to give entrepreneurs in Côte d'Ivoire a second chance !

Jes Colding, MYC4

avatar image MYC4 STAFF
Level 6
  New Partner: AE&I
Posted 03.05.2010 16:37 CET

For those of you who understand French, I'd like to share this video with you.
I have asked Jes Colding, who has been responsible for carrying out the due diligence, to answer the concerns raised below.


avatar image S Lennartsson
Level 10
  New Partner: AE&I
Posted 27.04.2010 17:58 CET | Edited 27.04.2010 18:00 CET

I think a certain amount of scepticism vis-à-vis MyC4’s capacity in selecting and monitoring providers is healthy.

In a presentation like this, one or two lines about the status of the country with regard to MFI would help investors to understand the challenges. May we assume that Côte d’Ivoire, too, is lacking national legal framework for micro finance and consequently has no supervising authority?
Rating committees may be nice for reference but for securing trust in operations I miss information on what auditing arrangements that exist (whether audited by MyC4 or others).

I encourage fellow investors to read AE&I’s version of the events – not so much for the “Kiva incident”, which seems well reflected from both sides, but because of
a) it displays a serious lack of competence in IT within this organisation (NB! The IT system is core to their business!)
b) the organisation’s vulnerable dependence on one person – once he was away an important payment failed, i.e. no back-up and no delegation structure existed.
I hope that AE & I was able to learn from this, but should not these issues have been captured in MyC4’s due diligence?

avatar image Henrik Juul-Madsen
Level 7
  New Partner: AE&I
Posted 27.04.2010 16:56 CET

Embarrassed. I obviously have not have not read the text in full. I must have been disturbed.

Sorry about that.

avatar image Joerg Schwieder
Level 10
  New Partner: AE&I
Posted 27.04.2010 13:30 CET

Have you read the post below? I mean: to the end?
What else do you expect MyC4 to publish?

I mean: I don't say everything is fine, you have to judge on that yourself and I for myself have not made up my mind, yet (will act like on the other providers and invest a little and wait a lot) but it's not like Jes didn't cover the issue in this post, there's a lot of information linked in the article including kiva's and including your link.

How about reading first and complaining later?

avatar image Henrik Juul-Madsen
Level 7
  New Partner: AE&I
Posted 27.04.2010 12:50 CET

I would like MYC4 to comment on this providers history with Kiva

I am certain MYC4 have recieved satisfactory explainations regarding this providers history.
Otherwise they would not have been accepted as a provider here.

avatar image MYC4 STAFF
Level 6
  New Partner: AE&I
Posted 26.04.2010 13:55 CET | Edited 21.03.2019 11:45 CET

Dear MYC4 Community,

We are happy to welcome a new partner to the MYC4 marketplace and at the same time open up for new activities in Côte d’Ivoire. Afrique Emergence & Investissements (AE&I) is a private micro finance institution, specialized in the distribution of micro-credit and loans and in the structuring of micro saving products for small size businesses and the informal economic activities in Africa.

MYC4 has been in contact with AE&I for almost 2 years and recently carried out a thorough due diligence on AE&I, which has proven to be a very strong organization with a good performance and track record, and with established and well proven procedure and governance.

At the same time, AE&I has committed to take over collections efforts on MYC4’s old, outstanding portfolio in Côte d’Ivoire (Notre Nation and Ivoire Credit). These efforts have already begun, and the first collections were made last week.

Expanding activities in Côte d’Ivoire is an important step for MYC4. West Africa in general holds a great need for financial services, and the markets are far from serviced. Additionally, Côte d’Ivoire is an interesting market given the fact that the currency is fixed to the Euro meaning that there is no currency risk made on investments in Côte d’Ivoire (except for a general devaluation  of the CFA in all eight CFA countries which last happened in the mid 90’s).
The partnership will start with an intro phase, allowing AE&I to upload loans at a total value of EUR 200,000 in the coming six months. Hereafter, MYC4 will evaluate the performance of AE&I with a view to expand the partnership and upload limit.     

Training this week – 1st loan expected May 1st
This week, MYC4 staff is carrying out on the ground training of AE&I’s employees. This entails e.g. the operation of MYC4’s systems, repayment procedures and policies. During this week, AE&I’s partner profiles will also be created on, and we expect to be able to upload the first loan from AE&I by May 1st.

As has been made obligatory for all new partners, MYC4 has entered into a risk sharing agreement with AE&I based on the same principles as our agreement with Fusion Capital. That means that AE&I has provided a bank guarantee equaling 20% of their outstanding balance to cover defaults. In case of defaults, the Investors carry the first 5% risk and AE&I covers 95%.

Rated best performing MFI in Côte d’Ivoire
AE&I was founded in 2003 by a former Citibank executive, Fahan Bamba, and in 2007 the company was rated the 16th best performing MFI globally by MIX Market (see the report here).

Fahan Bamba

In 2009, a joint committee consisting of UNDP, Ministry of Finance and Ministry of Social Affairs rated AE&I the no. 1 performing MFI in Cote d'Ivoire ahead of CECI and Caisse Rural.

AE&I is partnering with a range of highly profiled partners. Thus, AfriCap, I&P Development and Access Bank are shareholders in the company. AE&I is additionally funded by Oikocredit, PlaNet Finance and BRS (Banque Regionale de Solidarité).

Starting out just after political and social disturbance in Côte d’Ivoire, AE&I had the goal of providing access to capital for unbanked people. Thus, AE&I is built on a strong social profile, which is very much in line with MYC4’s mission. For the time being their 6 branches in Abidjan and one in the coastal town of Sassandra are offering relatively small loans to individuals in urban areas but over time AE&I wish to expand both in product offering and geographic outreach. Recently they have introduced a micro-lease product which allows women to gradually buy their market stall in newly build, hygienic, central market places in Abidjan. The women pay a daily small amount (1 $) and after less than one year they own their stall – a rare privilege in a country where private property is usually reserved for the rich. Apart from the 7 branch offices AE&I is conveniently located close to the borrowers through a system of 42 small kiosks in central locations.

AE&I are managing their portfolio and savings by means of the Rolls Royce of Microfinance IT, Bankers’ Realm from Croft Silicon.
Additionally, in August 2009, the African Management Services Company, AMSCO, which is a programme under among others the United Nations Development Programme (UNDP) and International Finance Programme (IFC) together with the African MF investor Africap (also a shareholder of AE&I), has provided a two-year position of an experienced microfinance expert, Alain Agnipke, who has the assignment to assist and continue to strengthen AE&I’s governance and procedures during the coming growth. AE&I plan to break even already this year.

Former Kiva partner
From April 2007 to July 2008, AE&I was operating as a Kiva field partner, disbursing little more than 200 loans at a total of USD 192,757. However, after Kiva claimed to have found some inconsistency in AE&I’s loan portfolio, they decided to terminate the partnership, and after AE&I has repaid all outstanding loans by July 2008, the partnership was terminated. This information is available on MYC4 has contacted Kiva to get further information and have asked Kiva to elaborate on the matter, but because the facts of the case were very “muddy”, Kiva does not wish to give further comments that what is stated on their website. The matter arose when a Kiva Fellow (a volunteer programme under Kiva) discovered irregularities in AE&I’s procedures. The fellow’s blog can be seen here. To get the full picture of what happened back in early 2008 it is essential also to read AE&I’s version of the events on their website.

MYC4 has no reason to believe that AE&I has been doing fraudulent business, and all references, audits and reviews show that AE&I is a healthy organization with high ethical standards. The same is the case with MYC4’s due diligence, which firstly lives up to our highly strengthened demands, and secondly has been even more thorough because of the previous case with Kiva. We find no reason for not partnering with AE&I.    

MYC4 is happy to welcome AE&I on MYC4 and wish them and our many investors, who can now again invest without currency risk, good luck on our marketplace!

You can read more about AE&I on their own homepage, which is, however, undergoing redesign. 

AE&I's office.

Best regards,

Jes Colding
Executive PA and responsible for West Africa Operations

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