MICROCAPITAL STORY: The West Africa Sustainable Economic Initiative (WASEI) of Aruba, a Project of Micro Venture Support (MVS), Offering Over 4.5m Class B Common Stock Shares through the First Such Offering on the MicroFinance Exchange (MFDAQ)
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Monday, June 9, 2008

MICROCAPITAL STORY: The West Africa Sustainable Economic Initiative (WASEI) of Aruba, a Project of Micro Venture Support (MVS), Offering Over 4.5m Class B Common Stock Shares through the First Such Offering on the MicroFinance Exchange (MFDAQ)

» Posted by in Category: Africa,An Emerging Asset Class?,Deals,Regulation at 12:02 am

Legally incorporated in Oranjestad, Aruba, the West Africa Sustainable Economic Initiative (WASEI) is a for-profit company which will establish microfinance institutions (MFIs) as well as business incubators to complement the former by training and supporting the borrowers. WASEI is currently offering 4,505,000 Class B Common Stock Shares at USD 1 per share through the MicroFinance Exchange (MFDAQ) as part of the first round in a long-term capitalization effort. As stated in a memorandum available to registered users of MFDAQ, the minimum subscription is 500 shares, investors will have full dividend rights, and those shareholders who purchase interests during the current round of offerings will be granted half the amount that they own, at no additional cost, during round two—to take place at the beginning of year three of operations. Voting rights are reserved for 5,000 Class A shares, all of which will be retained by Micro Venture Support (MVS), the nonprofit parent organization of WASEI. All interested investors must register on http://mfdaq.com/. At the time of writing, a balance of 2,997,500 shares remained.

WASEI was established as an Aruba Vrijgestelde Vennootschap (AVV) or an “Aruba Exempt Company,” a form of the Limited Liability Company (LLC). According to Visit Aruba’s web site, the AVV classification was introduced in 1988 and is characterized by an exemption from all taxes in most cases, a stipulation that the AVV may not participate in Aruba’s economy, and an absence of a requirement to file financial statements. Notably, however, an AVV “is not allowed to be active as a credit institution or credit association,” which may explain why WASEI does not plan to act as an MFI itself, but rather, will create a separate entity in Cameroon to that end, and will provide it with support through business incubators and other activities.

The offering is the first of its kind through MFDAQ, an online stock exchange designed for the microfinance industry and its high demand for access to the capital markets. Announced for the first time on July 13, 2007 at the Fredericks Microfinance Conference 2007, an event organized by the UK-based Fredericks Foundation, MFDAQ is a creation of The Alternative Electronic Stock eXchange (AESX), a software developer which has produced several other micro-exchanges since its founding in February 2006 including The Caribbean Bond Exchange (Caribond) and The Dutch Caribbean Stock Exchange (DCEXCH). MFDAQ was previously reported on by MicroCapital here. Financial information for MFDAQ was unavailable.

MFDAQ will also be hosting an upcoming offering of shares for Bid4Good, a for-profit firm helping charities to raise funds using unconventional means such as auctions by way of text messaging through mobile phones and the utilization of a wide range of social networking platforms including Facebook, Friendster, and MySpace. Neither terms information on the upcoming Bid4Good interests offering, nor general financial information for the company, were available. The following organizations will also be coming to MFDAQ soon, but do not maintain web presences: 1st 3rd, VC20, and Bandway.

With the eventual goal of establishing operations in up to 12 other countries, WASEI will begin with a pilot project based in Cameroon where an MFI will be established along with a business incubator, the latter of which will be in partnership with Regent University of Virginia Beach, Virginia and will provide business management training to borrowers in the areas of accounting, coaching and mentoring, equity investment, information technology (IT), and market development. WASEI’s stated goal for the first two years is the deployment of USD 200,000 in loans to 2,000 entry-level entrepreneurs through 6 branches, after which an expansion into other developing countries will be pursued based on the Cameroon experience.

WASEI’s parent organization, MVS, which was recently founded, is based in Washington, DC and aims to support profitable MFIs with both capital and training. Presiding over the institution, for which information on financial backing was unavailable, is Linda F. Yahr, a Certified Public Accountant (CPA) and former Financial Officer with the Grameen Foundation (GF), an organization partnering with 53 MFIs working in 27 countries and reporting March 2007 total assets of USD 18.9 million (page 4). GF was a signatory of the recently proposed code of ethics for microfinance, as reported by MicroCapital here.

WASEI, which does not expect to offer its investors a financial return until year five at the earliest, will also present franchise opportunities for businesses strategic to the local markets, such as Barefoot Power. Based in Melbourne, Australia, Barefoot Power aids rural communities in the planning and execution of sustainable energy projects and was established in January 2005. Mainly working through local partners, the for-profit organization is focused on the Asian Pacific and aims to steer rural villages away from kerosene to economically viable, environmentally safe, 24-hour power, derived from systems based on biofuel, biomass, geothermal, and solar, among other applications. Financial information for Barefoot Power was not available.

Providing in-country, on-the-ground assistance to WASEI will be Bethel World Outreach Ministries International (BWOMI), a Christian ministry organization headquartered in Silver Spring, Maryland with a strong church presence in West Africa, including Cameroon. Financial information for BWOMI, which has a membership of over 30,000 people spread across 45 countries, was not available.

By Anthony Busch, Research Assistant

Additional Resources:

The Alternative Electronic Stock eXchange: Home

The Aruba Stock Exchange: Home

Barefoot Power: Home

Bethel World Outreach Ministries International: Home, Contact, About

Bid4Good: Home, Auction 4 Good, Network 4 Good

The Caribbean Bond Exchange: Home

The Dutch Caribbean Stock Exchange: Home

Facebook: Home

The Fredericks Foundation: Home, Fredericks Microfinance Conference 2007

Friendster: Home

Grameen Foundation: Home, Who We Are, Financial Statements

MicroCapital article, July 9, 2007: “Alternative Electronic Stock Exchange Platforms AVV (AESX) to Publicize Creation of Microfinance Capital Market MFDAQ at Microfinance Conference in London”

MicroCapital article, May 27, 2008: “Code of Ethics Proposed for Microfinance”

Micro Venture Support: Home, West Africa Sustainable Economic Initiative, Contact

MicroFinance Exchange: Home

MySpace: Home

Regent University: Home

Visit Aruba: Home, Aruba Exempt Company

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