The risks involved and risk mitigation

Affordable micro-finance programmes have historically shown very high repayment rates, usually 97%+. At 1to4, we look to further reduce the risk and exposure of our Guarantors through:

• Rigorous due diligence on all MFI loan applications.

• Diversifying our loans across the world avoiding over-exposure in any one region.

• Sharing the default risk on a pro-rata basis over the entire pool of Guarantors. In the event of an MFI default, each Guarantor bears the pro-rata loss on a tax-deductible basis (consult your tax advisor).

• Actively expanding the Guarantor programme. As the risk is shared pro-rata, each additional Guarantor joining the programme reduces each current Guarantor’s individual risk exposure.

• Leaving the Guarantor’s assets to work “normally” for the benefit of the Guarantor. Guarantors do not realise a return on the guarantee risk, but do maintain complete control of their assets, thus receiving all investment returns from their portfolios.