"Floods" of loans to the same region / to competitors

[Guest]

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[wthepoo]

from: http://www.kivafriends.org/index.php/topic,2234.170.html

Bolivia, in recent weeks, has had a number of loans fully funded which have not yet disbursed. They will likely disburse within days of each other, at best. On the same day, at worst.
This scenario makes it very difficult for the group members to sell their goods to their friends and neighbours because almost everyone is in one or another group.

Lorna

Lorna, thanks for raising this issue.

While I am not sure about those Bolivian loans because I do not know what businesses the borrowers are in and if they really are competitors (if not, the loans help pouring money into that region and can even help increasing sales for each borrower IMHO), I am a little concerned about CRAN's recent loans to fishmongers:

Yesterday and today at least 15 (!!!) loans to fishmongers from the same city/town in Ghana popped up, always claiming that the demand for their goods was very high and that they thus wanted to expand their businesses [to be fair, some seem to sell raw fish and some seem to smoke and process them first]. Whereas every single one deserves the assistance, I am sure, and it's a real dilemma to cut some of them out, I don't know if the demand is really high enough for 14 expanded businesses - or if they will have to enter into some sort of fierce price competition.

Such competition may help their customers (paying less per fish) and possibly the local fisherman/women (receiving more per fish) - often the fishmongers seem to sell the fish their husbands/families catch, but to "expand their businesses" I assume they have to reach out to other sources - but not the fishmongers themselves. This may even increase the risk of default...

Am I missing something?

Best wishes,
Wolfgang.

Edit: And... looking into CRAN's loans I discovered that several more such loans have been disbursed very recently (including at least three double listings).

[cpbailey]

Elmina, Ghana has a population of 20,000.  I think 15 families getting funds is probably will not be an issue.  There is a tourism component for Elmina's slave trade historical buildings which are right on a gorgeous beach.  Fishing is becoming more challenging as foreign factory ships are overfishing the area.  Locals must go further to get their catch.  I imagine this will drive up costs for the entrepreneur as well as sales prices. 

Colette

[wthepoo]

Thanks a lot, Colette, for putting things into relation, and for the valuable information. It makes much more sense, now, though it still strikes me as slightly odd.

Best wishes,
Wolfgang.

[Alphecca]

Hi Wolfgang!
A picture is worth a thousand words.
Picture of Elmina port and fishermen...

[howard]

Since CRAN is one of only two MFIs in West Africa to be showing a delinquency rate (just over 7%), perhaps they should be more selective! However, as always, the problem can be in the admin rather than the borrowers.

Howard

[Soriak]

That picture looks like the tragedy of the commons at work... this isn't going to end well for them

[wthepoo]

Hi Wolfgang!
A picture is worth a thousand words.
Picture of Elmina port and fishermen...

  Linda

[howard]

Since CRAN is one of only two MFIs in West Africa to be showing a delinquency rate (just over 7%), perhaps they should be more selective! However, as always, the problem can be in the admin rather than the borrowers.

Howard

Glad to see that CRAN has today got its problems sorted out, and has repaid delinquent loans, with its delinquent rate dropping to zero. So not too many fish-sellers in Elmina!

Howard