We will provide access to the following new products:
Micro-Equity (Revenue Sharing):
The equity product provides financing in the form of an in-kind transfer of young goats (equivalent to 10,000 EGP, or roughly ~$5300 as of July 2022, providing 7-10 goats depending on market prices). The borrower is expected to take care of these goats (including by feeding them and walking them) over the course of 6 months. At the end of the 6 months, they are expected to sell the goats on the market for a profit. The profit comes from an increase in the weight of the goat which is sold for its meat. When sold, the market price received is allocated by first returning the original amount of the financing (i.e. 10,000 EGP) and then splitting the remaining funds, with one-third going to the financial institution and two-thirds going to the borrower. For example, if the fattened goats sell for 16,000 EGP, the borrower will keep 4,000 EGP and the bank will receive 12,000 EGP.
The micro-loan will provide similar financing the form of an in-kind transfer of young goats (again, equivalent to 10,000 EGP, or roughly ~$530 as of July 2022, providing 7-10 goats depending on market prices). Borrowers will then be expected to repay these funds as well as an additional 13.5% in interest fees 6 months after disbursement (i.e. the bank will received 11,350 EGP at the end of the loan cycle). These loans differ from existing credit contracts because they don’t require repayment until 6 months after disbursement. Standard loans in this market require repayment starting on a monthly basis even though this is not in line with the cashflow timing of agricultural products like goats.