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
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?