Archive for February, 2010
The Dangers of Being an MFI Loan Officer
Imagine you’re a loan officer who’s working for one of Kiva’s partner MFIs. You’ve been traveling around the field, collecting repayments from quite a few clients over the course of the day. It’s getting late, and you’ve amassed a huge amount of cash – the equivalent of a few months’ worth of income for locals. As the sun begins to set, you realize you’re still at least an hour away from the office – an hour’s worth of travel on your motorcycle, over rough roads that are poorly (if at all) lit. What do you think could happen next?
Continue Reading 28 February 2010 at 18:27 evacwu 9 comments
Who really cares about Kiva loans? The difference between Kiva and MFI loans
There’s differing opinions and many comments on the default protection policy where partners will no longer be able to guarantee Kiva loans (see posts by Claude Mansell and Nicky Goh), many of you Kiva Lenders are worried this move will greatly affect your portfolio and that MFIs will not care as much about delinquency and default in Kiva loans, but I ask… are you alone?
Continue Reading 27 February 2010 at 10:00 Carlos 5 comments
Governments in microfinance: good or bad?
Since Evo Morales and the Movement Towards Socialism came to power in 2006, Bolivian microfinance institutions (MFIs) have worried that the government will intervene in the industry, to the detriment of private sector providers. Indeed such concerns have become a common theme across the region, with increased government involvement in microfinance in Venezuela, Ecuador and Colombia.
Continue Reading 26 February 2010 at 09:12 adamkb 2 comments
The Royal Rumble: Yunus v. Compartamos
“You’re unhappy. I’m unhappy too. Have you heard of Henry Clay? He was the Great Compromiser. A good compromise is when both parties are dissatisfied, and I think that’s what we have here.” – Larry David
Within the international development community, a debate for the heart of the movement came to the fore two years ago with the IPO of Compartamos, the largest microfinance institution in Mexico. Divisive and controversial, Compartamos’ decision to sell shares and publicly list on an exchange is perhaps the clearest manifestation of where the two sides diverge. One side, led by Muhammad Yunus, founder of the Grameen Bank and winner of the Nobel Peace Prize in 2005, contends that, at its core, the sole fundamental mission of microfinance is poverty alleviation. The other side argues that the goal must be maximizing profit and, more specifically, ROE (return on equity) – extending services to a previously unbanked population and expanding via revenue growth. Just about everyone has an opinion on the decision and, at the very least, it allows for a great philosophical and economic debate about the most effective way to assist the billions of people who live below the poverty line.
Continue Reading 26 February 2010 at 08:00 Josh Weinstein 13 comments
Falso! Parte Dos – How to Tell If Your Money is Fake in Bolivia
Since beginning to work in La Paz, Bolivia with microfinance institution and Kiva partner Emprender, one of the first things I wanted to learn was how to tell a fake Bolivian bill from a real one.
Every Emprender office has a caja (cashier) where clients get their loan disbursement and pay their loan payments. Each cashier has a sign that says “Every fake bill will be perforated” with a sample fake bill stuck on the window.
The institution is vigilant about fake bills. When a client pays their loan payment, their initials are marked on the bill and the cashier examines it to determine its authenticity. In the case it is deemed to be false, the bill is returned to its owner and the payment must be made again.
Here are some ways to tell the difference between real and fake bills in Bolivia from the cashier at the Emprender Pampahasi branch…
Continue Reading 26 February 2010 at 05:36 lethalsheethal 8 comments
Not so micro credit
One of the questions Alidé, Kiva’s field partner in Benin, asks clients when they’re applying for a Kiva loan or writing their journal update is What are your personal ambitions? What are your dreams for the future? Many of Alidés clients don’t have the luxury of thinking very far ahead (maintaining my business, reinforcing my business they respond). Of the dreamers, they all answer the same thing – they’d like to acheter une parcelle et construire une maison (buy some land and build a house) be it for their home or business (though that’s often the same place), a real one out of cement.
Sadly, this is a pipe dream for many of Alidé’s clients; (more…)
Lending in Ukraine is Sexy!
When you look at the average photo of a Ukrainian Kiva Borrower, you’ll most likely see a woman about 40 standing in front of retail shelves stocked full of merchandise. Chances are she’s a vendor at one of Ukraine’s many outdoor markets, or Rynok (Рынок).
Meet Alla Slichko, a vendor at an outdoor market in Mukachevo, Western Ukraine. She's currently fundraising - consider lending her $25!
During Kiva Fellows training at Kiva HQ in San Francisco, I learned that Kiva borrowers located in Eastern Europe or Central Asia are often the least popular on the Kiva docket and the last to receive funding. One staffer even suggested that lending in Ukraine isn’t sexy. How could this be?! Perhaps it’s the well-stocked shelves, or maybe the often un-smiling, warmly dressed men and women, that do not illicit immediate sympathy or the thoughts of poverty that lenders often associate with Kiva borrowers? (more…)
Kiva Fellowship Sparks Self Awareness
Looking at my feet reminds me to, "Be Here Now" (Ram DaSs 1971)
As a Kiva Fellow, working in the field, life is often very exciting. There’s a funny thing about excitement though, sometimes it’s fueled by sheer joy and sometimes by total fear (otherwise known as anxiety!) It doesn’t seem to matter though what direction the catalyst is coming from, when I get excited I get, “all sorts of crazy” in my brain, thoughts fly left and right from one thing to another quickly and randomly. From one minute to the next I’m thinking about “minimum wage laws in Cambodia, how wonderful the frangipanis are here, my taxes, where I’ll be this time next year, genocide, mosquitoes – I wonder if the doxycycline really works, I wonder where I put that camera cord?” It’s like a losing game of Tetris sometimes, the music starts to go faster and faster and the pieces are just barely sliding into place as I try to stay present on what I am actually doing. Essentially my brain moves faster than my body and the result …well…here’s what happens…
A Kiva Entrepreneur Meets YOU!
On February 17, 2010, I introduced the Kiva world to Robert Nandemu, a mixed farmer in western Kenya taking out a $1,050 loan. This week, the opposite holds true, as earlier today Robert met the 39 lenders to his loan!
Meet a Micro-Debt Collector
Alioune Badara Thioune has a confident stride. In the mornings he comes into the office sporting stylish sunglasses, a leather briefcase and a newspaper carefully tucked under his arm. After making the obligatory “good morning” rounds, he chooses a chair in the hallway and opens his newspaper until he is called into the office of the regional head. For some reason he always reminded me of a Senegalese Chili Palmer – John Travolta’s character in Get Shorty. And this was before I knew exactly what he did. (more…)
Why do we need Microfinance Institutions (MFIs) and Interest rates?
A blog in response to comments under “Bad Roads, Interest Rates, and MFI Sustainability”
Food for thought on Interest rates
* Have you ever seen a microfinance institute?
Working with Community Economic Ventures (CEVI) in the Philippines I have come across the most passionate, forward thinking bunch of individuals who really care about the community in which they operate. They are of similar mindset to the lenders, Kiva staff, and us fellows. They are a part of this because they really care. Of course they have operational costs! They have staff. They need to distribute the money. The loans are small.
Let there be light!
Kiva brings sustainable energy to an isolated farming community in Honduras!
Continue Reading 23 February 2010 at 22:54 Kati Mayfield 7 comments
Living atop a Goldmine without a Shovel: Property Rights and Development in Cambodia
“Whenever there is a conflict between human rights and property rights, human rights must prevail” –Abraham Lincoln
I recently had the privilege to meet four Kiva borrowers living in a slum in northern Phnom Penh. As a Kiva Fellow and microfinance fan, it was a positive experience overall because all four explained that they had managed to double their daily incomes by investing in their businesses with a simple $200 loan, and had no trouble paying the loans back. One point for microfinance! The problem was, all wanted to take out larger loans but could not because they don’t hold legitimate land titles, the primary form of collateral in Cambodia.
Mongolia goes green!!!
Yes, it might be the dead of winter in Mongolia, with temperatures hovering around -30 degrees Fahrenheit, but the loan products here have been turning green. Thanks to the hard work of the Eco Products Team at XacBank in Mongolia, Kiva lenders saw an introduction of 3 new types of personal consumption ‘green loans’ in December 2009:
Energy Efficient Stoves
Ger (yurt) covers
Energy efficient fuel
Continue Reading 23 February 2010 at 01:35 Beth Ritchey 24 comments
Live Music from Senegal
Several times last week I woke up to the sound of explosions, which were not too close but not too far away either. At first I thought they might be leftover fireworks from Carnival but I quickly realized that I was listening to a gunfight between the Senegalese army and rebel troops from the Movement of Democratic Forces of Casamance. I arrived in the town of Ziguinchor, the regional capital of Casamance, aware that for the past 30 years there has been a “low density war” between the Senegalese government and separatists. The conflict resurfaces once in a while and around the time I heard those explosions last week two Senegalese soldiers were killed, somewhere in between here and the Guinea-Bissau border. The people that live here have grown up with the conflict and are accustomed to the occasional military operation. They have even developed a sense of humor about it – the next day at work, one of my UIMCEC coworkers asked if I had heard the “music” the night before.
Continue Reading 22 February 2010 at 09:32 Nick Malouin 3 comments
Changes to the Repayment Policy – who wins?
Some of you may have seen Kiva’s recent announcement of the policy change with regards to repayments, or indeed Claude’s excellent post from last week about the impact of Kiva policies in the field. As someone who has spent more than her fair share of time trying to implement a stricter repayment reporting policy at SEM in Senegal during the last 3 months, I too have found myself wondering what effect the recent removal of lender protection is going to have on the MFI’s operations.
Continue Reading 22 February 2010 at 08:51 nickigoh, KF9, Senegal 9 comments
When Microfinance Isn’t Enough: Thoughts from the Rough Roads of Ecuador
Have you ever thought about what the red, white and blue in the American flag represent? While there are many theories, the most popular seems to be the following: white signifies innocence, beauty, and purity (they clearly had the cast of the Jersey Shore in mind when coming up with this one), red for valor and hardiness, and blue for vigilance, perseverance, and justice.
The Ecuadorian flag, however, has the following meaning: the large yellow band represents “the country’s mineral and agricultural wealth, and its extensive natural resources”, the blue signifies “the ocean, and the clear and clean Ecuadorian skies”, and the red symbolizes “the blood spilled by the heroes who died in the name of their countrymen’s Fatherland and Freedom.”
The significance of the yellow in the flag made me pause…if the country has such mineral and agricultural wealth, why is there so much poverty? According to The World Factbook, over 38% of Ecuador’s population live in poverty (compared to 35% in Cambodia, 30% in the Philippines, and 12% in the USA). The fact that Ecuador’s terrain is so “wealthy” seems to directly contradict the amount of poverty seen here.
Continue Reading 22 February 2010 at 04:18 Leigh Madeira 10 comments
My 5 favourite Kiva videos
It has been 2 weeks since I first arrived in the Philippines and I can truly say every day has offered a new adventure. The highlights so far would have to be meeting the welcoming staff at ASKI field partner, singing with a band in front of the entire staff and Board, day trips to explore the community development projects of ASKI and meeting my first borrowers in the field.
Continue Reading 21 February 2010 at 17:02 vishnu84 3 comments
Local knowledge remains crucial
Caurie Microfinance, the MFI I’ve been working at as a Kiva Fellow for two weeks, doesn’t work like a bank in our part of the world. The key difference is that Caurie MF doesn’t do business with individual customers, but rather with groups of customers, so-called “Bancs Villageoises” (meaning Village Banks; an individual bank would be correctly called “Banque”. This turned out to be a protected term, so Caurie MF writes “Banc” but pronounces it like “Banque”;-).
Continue Reading 21 February 2010 at 09:48 Samuel Trauffer 4 comments
Slavery – abolished or reinvented?
Is exploitation just another form of slavery? This question has crossed my mind a few times today.
The borrower I just visited (who will remain anon) uses her loan to buy materials to make a product.
After a fair bit of questioning and digging. Here’s the dirt.
The Case of the Faceless Lender
Last week, I spent two mornings making the rounds of six WAGES branch offices that participate in Kiva. Accompanied by the Kiva Coordinator, I met with loan officers and branch directors to refresh their memories on the importance of transparency, clarity of photos, and detailed profile information. Most of all, I wanted to give Kiva a human face. While Kiva lenders are well aware of the person-to-person (P2P) connections Kiva aims to establish, the direction of this gaze is often one-sided. Kiva lenders are informed of the employment, location, and even marital status of the entrepreneurs they help. Yet, from the ground looking up, it is easy to see Kiva as a faceless, impersonal backer behind their partner MFIs. Kiva is often simply thought of as an organization that lends money to MFIs, which allows the MFIs to lend to their clients. While this idea is not inaccurate, it is certainly incomplete. I was disturbed by the thought that P2P connections were created between lenders and borrowers, but not between borrowers and lenders.
Continue Reading 20 February 2010 at 08:31 taylorakin 19 comments
Pains and pleasures of Kiva’s P2P principles
By Claude Mansell, KF10, Rwanda
Kiva is pushing the limits of P2P microfinance lending. It already is the most transparent peer-to-peer platform connecting lenders and borrowers around the globe. Yet until February 1 lenders were receiving all of their money back, whether a borrower fully repaid his loan or went into default. Kiva’s local microfinance partners tended to guarantee full repayment. This “cushion” shielding the lender from the harsh economic reality has now been removed by Kiva, in an audacious move to bring lenders closer to the borrowers’ real life. Will lenders be confronted with massive losses? How will the partner Microfinance Institutions react to this policy change? Does the policy change actually bring lenders closer to borrowers, in an emotional and economic sense?
My gut feel says that Kiva’s Microfinance Partners will do their utmost best to minimize default rates on the Kiva loans. Have they not, in the previous years, voluntarily guaranteed full repayment and carried the credit risk, only to be an attractive partner for Kiva and its lenders? Also, now that the MFI’s do not need to write off on Kiva loans, the benefits of having loans funded by Kiva only get larger. Would they want to jeopardize the interest- and risk-free funding by Kiva by a bad repayment performance? Surely not!
I tested this assumption on my visits to branch offices of Vision Finance Company (VFC) in Rwanda. The statement of Semahoro Evariste, branch manager in Kanazi, 30 km from Rwanda’s capital Kigali, reflects their position well:
“If there is a risk, it is not more than 5%“, “We will do everything possible to get full reimbursement”, and he concluded by saying: “I want to thank those who provide credits for our clients, it is really very interesting, we will do everything to be Kiva’s extension in the field”.
What could be the worst case scenario for Kiva and its lenders? At VFC, the Portfolio at Risk (PAR 30) is 7,3%. PAR 30 is a conservative measure for payments at risk. Using this measure, lenders run a risk of 7,3% when lending to customers of VFC. Of course, this is an average. In the worst case one lends to this one person who happens not to repay at all. So, as in all other investments, it makes sense to spread the risk through a well balanced portfolio of Kiva loans!
Then what about the emotional and social side of this new policy. Would you, as lender, rather be living under the rosy yet unreal assumption that all Kiva borrowers fully and unconditionally repay their loans (contrary to what we see happening in all other credit markets), or do you want to feel the dust, sweat, draughts, heat or bitter cold that comes along with your borrower’s effort to pay you back?
Celebrating Carnaval in South America, Kiva Fellows Style!
Carnaval! The excitement summoned up by uttering those words: Carnaval!
Carnaval is a very interesting holiday for all sorts of reasons, and is celebrated in a variety of forms all across South America, most of which involve colorful costumes, thumpingly loud music, crazy line dancing and (if you’re lucky) some kind of substance rubbed into your head, ranging from shaving cream to flour. Kiva Fellows currently stationed across South America took a break from their workloads in order to scope out the scene …
And where have all the Journals gone?
The Q&A sessions of last week continue. I have to really open my ears to get the “A’s”, because the best responses to the ever-growing list of “Q’s” usually come unsolicited from “platicas”, or casual conversations.
The best reply yet to last week’s ambitious question of “What were the immediate and latent effects of last year’s disastrous economic and political situation in Honduras?” came in a “platica” I had with Prisma loan officers about Journals …
Continue Reading 19 February 2010 at 07:11 Kati Mayfield 5 comments
What´s the difference between microcredit and subprime lending?
It´s a loan for someone who was unable to get a loan from a mainstream bank because they didn´t have the necessary paperwork or their income was too low or too volatile. The borrower is likely from a marginalized group, perhaps a migrant family. The loan costs more than a bank loan would cost, but the alternatives for this borrower are even more costly. The lending institution might hold these loans on their balance sheets, or they might sell them on to someone else…
So what are we talking about here, a typical Kiva loan or a subprime mortgage? Is there anything inherently different between the two?
Continue Reading 19 February 2010 at 06:00 adamkb 3 comments
Dr. Dolittle Keeps Those Kiva Pigs Healthy
Microfinance is not a standalone solution for poverty alleviation, it has to be combined with other development tools if one wants to make a tangible difference – this lesson was hammered into our heads repeatedly during the KF10 training in San Francisco last month, but it is only now, in the field with Koperasi Mitra Usaha Kecil (MUK) in Bali, Indonesia, do I see its significance.
Continue Reading 18 February 2010 at 00:09 Nadia Anggraini 4 comments
Kiva is no island
Last week I received a call from an American woman who has been working in the eco-tourism industry in Indonesia for the past 3 years. Her company offers tourists an opportunity to visit rural islands not far from Singapore and contribute to service projects in the region. She was interested in setting up a microfinance program of some sort to support the villagers near her operation, so she reached out to me, in part, to learn how she could partner with Kiva.
Of Chicken and Men
By Ujwal Kharel, KF9, Philippines
Today is my last day here at CCT. I can’t believe how soon it’s ending.
I have been largely absent from the blogosphere for more than a month. I blame that on two work weeks I missed being bedridden with chicken pox. I found it ironic (?) that I spent 19 years of my life in Kathmandu without any sickness, and within 4 weeks in a relatively cleaner and more developed city of Manila, I got bedridden. I realized that the worst part about getting a child illness at the age of 25 is not the severity of symptoms, but the ridicule from friends and cousins.
“What!? Chicken pox!? Haha! I had that when I was in the 3rd grade!”
“No way! But you are sooooo old!”
“Hey poxy!”
“Are you sure it’s not adult acne?”
Yeah, thanks everyone! (more…)
A city bouncing back
On August 15th, 2007 Ica, Peru was hit with a major earthquake measuring at 8.0 on the Richter scale. The city was left in shambles. In the affected region, 519 people were killed, 1366 injured, and some 76,000 homes collapsed. After two and a half years, Ica is still very much recovering. Walk the streets and you can’t help but see the scars and occasional open wounds.
Power-outage season in Benin
By Marie Leznicki, KF10 Benin
About two hours into my first day at Alidé, Kiva’s field partner in Benin, the power went out. Do you have a lot of power outages in the United States? the Kiva coordinator asked me. We do. It was a tough question due to the resigned disappointment in her voice. No, not very often, I said, but we did have a big one a few years ago, which affected tens of millions of people and lasted several days for some. And I went on to recount the Northeast blackout of 2003, coincidentally one of my favorite days in New York City, and she seemed to feel better.
The next day, the questions got harder. We all received a mass text from the telecom company saying that the entire city of Cotonou (population approximately 1.5 million) would have no water service over the weekend (depressing news to be delivered through such a novel media). Do you have a lot of water outages in the United States? she asked in the same tone as the day before. I couldn’t recall that ever happening.
Message from MTN
