MYC4.com is a micro-lending site that connects investors directly with African entrepreneurs who need financing for their businesses. Investors can open an account on the site with as little as 5 euros, and can receive a higher return on their investment than they would expect from more traditional forms of investment. There is a higher risk involved in the investments on MYC4, however, as the default rate on loans is quite high. There are also problems with runaway inflation in some African countries, which reduces the value of payments received from loans.
It is not currently legally possible for North American investors to remove any funds from the MYC4 site, but they are welcome to join the site as long as they agree that they will not be able to withdraw funds. MYC4 is working to change this. To this point, the site has helped over 15,000 investors invest more than 8,000,000 euros in more than 4,000 businesses in 7 African countries. The average rate of return (before defaults and currency loss or gain) has been over 13%. Investors on the site can examine the details of an entrepreneur before investing, and the site prescreens its entrepreneurs. There is also a forum on the site where investors can learn more about investing in the African economy from users who have already had some experience on the site. Realistic rates of return after defaults and currency gain or loss have been in the neighborhood of 5%.
The MYC4 site has been in open beta since October 2007. MYC4 is headquartered in Copenhagen, Denmark and has developments offices in Kampala, Uganda. The site was co-founded by Mads Kjaer (currently CEO) and Tim Vang (currently head of the MYC4.com site). The site has undergone steady growth since launch, and currently has an Alexa page rank well below the 300,000 mark.
Competition to MYC4 comes from other micro-lending sites such as Kiva, GlobalGiving and MicroPlace. Kiva is more well-established and offers loans to entrepreneurs throughout the developing world, not just in Africa. GlobalGiving provides a platform for investors as well as those wishing to donate money to entrepreneurs for specific projects. MicroPlace also offer loans to entrepreneurs throughout the developing world. Their site is much more well-established and developed, allowing investors to invest based on the poverty level in particular areas, the length of the loan, the rate of return and the amount.
The MYC4 site has a pleasing overall look and feel. The site is responsive, with some lag time in page loads, particularly with secure pages. Navigation is intuitive, and the site is laid out logically. There is a convenient top menu bar provided on all pages on the site. The tabs on the top menu bar include Invest, About, Forum and My Account. The forum has a good number of active participants.
Registration is not required to view most of the site and the forums, but is required to invest or to participate in the forums. The registration process asks for full name, gender, email address, password, job title, zip code, city, country, and date of birth. Users are also asked for a Legal Name for the purpose of withdrawing money from the site – this name must match the name on the account used to make withdrawals from the site.
There is no membership fee involved in using the site, but users must deposit money in their accounts in order to make investments. Deposits are accepted via credit card or bank transfer.
The MYC4 site is recommended to anyone with a desire to help people in Africa rise above poverty through micro-lending to establish businesses. Rate of return should probably not be the primary reason for using the MYC4 site, as the risk is quite high. The site is currently limited to making loans in Africa – there are other sites available for people who wish to make loans in other geographic areas.