The defiance of poverty alleviation: A case study of MYC4 A/S

Giulia De Giovanni

Student thesis: Master thesis


The African economy is growing rapidly and constantly since the beginning of this century. The regional Gross Domestic Product (GDP) has been rising by 5% a year since 2000, placing Africa within the world’s fastest growing economies. Despite the steady growth, the continent is still characterized by a high level of poverty. This case study is based in Kenya, a country with a population of 45 million people, of which 45.5% still live on less than US$1 a day. Against this backdrop, many solutions are arising to fight poverty. Microcredit has been largely seen as one of the solutions to eradicate poverty since its diffusion in Bangladesh in the 1970s. Thereafter, microcredit has been spreading across continents, including Sub-Saharan Africa. In 2008, this region recorded 16.5 million depositors and 6.5 million borrowers, however nowadays more than 380 million people in the continent still do not have access to a bank account. This paper is a case study of MYC4 A/S, a Danish microcredit peer-to-peer company that operates in Kenya. The vision of the company is to eradicate poverty through business. The aim of this thesis is to study the impacts of MYC4 East Africa, the 100% owned subsidiary of MYC4 A/S in Nairobi, on poverty alleviation in Kenya despite some challenges internal to the business model. MYC4 has indeed suffered consistent repayment delays from its borrowers’ providers, which has led to the temporary interruption of MYC4’s financial activities. The research question (RQ) this paper seeks to answer is: How and to what extent could MYC4 impact poverty alleviation despite the internal challenges it has encountered? The research is based on qualitative data. Interviews were conducted with a total of 32 borrowers in order to analyze their satisfaction and economic empowerment after having received a micro-loan. In addition to that, testimonials were collected from borrowers who have been defrauded by one of MYC4’s providers. The conclusion of the research is positive: MYC4 did have a positive impact on poverty alleviation in Kenya. However, in the discussion I further question the success of MYC4 in poverty eradication. This paper seeks to contribute to the literature on the impacts of !2 microcredit on poverty eradication in Kenya, underlying the intrinsic obstacles inherent to this solution. Whilst the data is only representative of MYC4 and cannot necessarily be extended to other research, this paper reveals challenges which a micro-financing business in Kenya can incur, and as such, could be of significant relevance for other microcredit initiatives.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
Publication date2015
Number of pages174