Posts tagged ‘kiva microloans’
You never forget your first time
As a Kiva lender turned Kiva Fellow, I will never forget my Kiva “first times”, from my first loan, to receiving my first partial repayment, to receiving my first completed loan repayment notice. My latest first took place recently in Benin, West Africa, when I visited my first Kiva borrower.
Continue Reading 5 February 2011 at 06:00 fbillou Leave a comment
3 Kiva smiles from Benin
One common theme when visiting Kiva borrowers in Benin is their positive attitude and broad smiles. Meeting these people makes my day, every day and I hope these pictures will make yours too.
The Last Mile
“The Last Mile” is one of the most debated concept in microfinance. Here is a real-life example from a recent borrower visit with ALIDe, Kiva’s partner in Benin.
How Good is Kiva for Microfinance Institutions?
Kiva field partner office in Cambodia
To carry out its mission of connecting people through lending to alleviate poverty, Kiva allows microfinance institutions (MFIs) to raise 0% interest capital on the Kiva website. MFIs use this capital to lend to entrepreneurs and collect (and keep) the interest on these loans. For MFIs, being able to raise interest-free capital is arguably the greatest benefit of joining Kiva. While this funding is interest-free, there is a still a cost associated with raising the capital. MFIs must expend resources to post loans, repayment figures, and journal updates on the Kiva website. Do these costs outweigh the benefits? Financially speaking, how good is Kiva for their field partner microfinance institutions? Let’s look at a real life example of a large Asian for-profit microfinance institution, considering only at the incremental benefits and costs associated with partnering up with Kiva (all figures in US Dollars). (more…)
Scoping Out the Competition
By Casey Koppelson, KF12, United States
One of my side projects here at Opportunity Fund is to learn about the competition—banks, credit unions, not-for-profits, and payday lenders—and how they are advertising small loans. What sort of messages are potential clients seeing?
Continue Reading 9 October 2010 at 00:00 caseykoppelson 1 comment
Sharing my Desk with a Tractor…
By Vanick Der Bedrossian, KF12 – Armenia
“What in the world is a diesel earth tractor doing in my MFI’s office!”, I thought to myself as I walked into Nor Horizon Credit Organization’s central office here in Yerevan, Armenia. Being a bit nervous on my first day at work, I did not ask.
Continue Reading 11 August 2010 at 00:16 travelkebab 4 comments
12th Class Kiva Fellows Training Week Recap
By John Murphy, KF12, Costa Rica –
By the end of our week together at Kiva HQ in the Mission District of San Francisco, it had become clear to everyone what all the Kiva hype is about. If you are a Kiva fan (which reading this likely indicates), getting an inside look at Kiva HQ would only reaffirm your admiration.
Continue Reading 3 August 2010 at 12:10 johnfmurphy 5 comments
Baseballs and candy (a very special repayment meeting)
by Magdalena Malinowska, KF11 Dominican Republic
It started at 10 am on a Thursday in Monoguayabo, a dusty industrial neighborhood of Santo Domingo. But first I had to get there and that took a long while, but it was worth it because the Luz de Madre Group’s meeting turned out to be unforgettable.
There was nothing out of the ordinary about the series of unthinkably beat up vehicles well beyond their expiration dates still serving as daily transport for hours at end. Nothing new about the purpose, the format and of the bi-weekly repayment gathering of ten of the seven thousand of Esperanza’s currently active borrowers in the Dominican Republic: attendance was taken, passbooks were updated, money was collected, Kiva interview was accomplished. In my 9th week in the field, I have witnessed several dozens of these all over the country. So what made this one special? Two things.
Continue Reading 1 August 2010 at 20:21 Magdalena Malinowska 2 comments
The Working Poor vs The Unbanked.
By Drew Loizeaux, KF11, Uganda
When talking to people about microfinance, many times the poverty level of the clients is brought up as a big way to measure an organization’s success. I felt this way for a long time and it makes sense. We have all heard stories of a poor farmer expanding his business or a “phone women” in a Bangladeshi village. As I have spent more time at microfinance institutions however, I’ve realized that view is incomplete. Yes, empowering the poor is a very important part of microfinance, but they are only a subsection of the really important group that a successful MFI must target; the unbanked.
Many times, poor and unbanked are synonymous, but other times they are not and it is important to recognize the difference between the two and how each group can help a community. To illustrate this point I want to introduce you to Fred.
Leaving behind Oscar Wao for real wondrous lives
By Magdalena Malinowska, KF11, Dominican Republic
After successfully (read: finally!) completing the first year of a PhD program a few weeks ago, I am pleased to (again: finally!) find myself in the role of a Kiva Fellow. With much joy I exchanged the ice-cold confines of the library for the warm embrace of the Caribbean climate in the birth-place of merengue and several all-star baseball players: the Dominican Republic. And it is with great excitement that I am leaving behind the pages of Junot Diaz’s comical rendition of the Dominican culture and embarking on the challenge of discovering the lives of real inhabitants of this island, through micro-finance. From Oscar Wao to real wondrous lives, from Hispanic Literature to Hispaniola, here I come!
Continue Reading 8 June 2010 at 18:21 Magdalena Malinowska 6 comments
Are Pictures Really Worth More Than a Thousand Words? –En español también
By Eva Nemirovsky, KF11 Kyrgyzstan
Sometimes. But, maybe not for Kyrgyz microfinance borrower using the Kiva platform. Poor Kyrgyz people make sure to look good for pictures, so good, in fact, that one may misleadingly think: “these people don’t need a loan!”
One issue that Kiva often discusses is why some loans are funded faster than others. There are some patterns worth noting, most significantly, that in Central Asia loans take a lot longer to fund. Some have argued this is due to the loan amounts being much greater, however, thus far at Mol Bulak Finance all the borrowers have been part of a group and therefore the loans have not differed too greatly from others on the Kiva website.
My hypothesis is that poverty in post-Soviet Union countries is not easily understood by outside nations. Kyrgyzstan gained its independence less than two decades ago; it is a young State that had almost no political history before Russia fully took over operations around 1920. Similar to Kazakhstan, Kyrgyzstan was a mostly nomadic culture throughout its entire history. The Soviet Union abruptly changed all this and unnaturally imposed its political, economic, and cultural norm onto the Kyrgyz territory.
Not everything was negative; the Soviet Union vastly improved Kyrgyzstan’s living conditions. For one, the USSR was famous for its superior education system and efforts were taken to make all Kyrgyz citizens literate. Fortunately, Kyrgyzstan continues educating its people until the ninth grade. This explains the striking 98.7% literacy rate in the nation today. If one compares this figure with the 39.3% literacy rate in Senegal (another Kiva site), one is automatically inclined to associate this with poverty. It is remarkable to realize that in per capita GDP, Kyrgyzstan rates 184th out of about 195 countries of the world. (Statistics from online CIA factbook)
With the collapse of the Soviet Union, Kyrgyzstan lost its vast market and the period effectively drained the country from much of its natural resources. Ultimately, Russia was centerfold and “if the strengthening of the centre required it, a policy of plunder in the borderlands would be proper and correct.” (Sources taken from Kyrgyz Republic by Stewart and Weldon).
Today, Kyrgyzstan has little developed industry. After a seventy-year Soviet rule, innovation is not accessible, business enterprise is difficult. The people living below the poverty line (which account for 40 percent of the country), have a minute variety of jobs to choose from: mainly trading and farming. Working in agriculture is difficult mostly because, if they wish to stay afloat, farmers must learn multiple trades. For example, if a borrower buys a cow with her loan, she cannot dedicate all her time to the livestock because her income would be insufficient—I learned that to raise a cow and use it for mating or meat purposes takes about three years. This borrower also has to: have a daycare, grow potatoes, and be a taxi-driver.
Two weeks ago, the instant I arrived to visit a borrower in Balykchi, he started to negotiate fish prices with the microfinance institute’s driver. I was there to verify that his loan was being used to buy a calf, but I was obligated to wait ten minutes for him to conclude his deal with the driver. Since this borrower’s activities did not make enough money for his household, he had become a part-time fisher.
This form of poverty is something I never had to study in school. When I first saw the Kyrgyz Kiva loans my initial reaction was to think that these borrowers did not need microfinance, but now, having seen it face-to-face, I have learned otherwise.
Pictures can also be deceiving, especially in the former Soviet Union where the legacy of controlled life lives on. To take a picture, or merely to go out of the house, citizens dress up; the possibility of public scorn is just too great.
Eva Nemirovsky is a Kiva Fellow working with Mol Bulak Finance in Bishkek, Kyrgyzstan. Join the Kyrgyzstan lending team. There are borrowers from Kyrgyzstan with Mol Bulak Finance who you can help by contributing to a loan today, and many other entrepreneurs from around the world on the Kiva site.
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Las fotos realmente valen mil palabras?
Por Eva Nemirovsky, KF11 Kirguistán
A veces sí. Pero quizás no para los prestatarios Kirguiz de microfinanzas que usan la plataforma de Kiva. Los pobres de Kirguistán siempre se aseguran de salir bien en las fotos, tan bien, de hecho, que uno equivocadamente podría llegar a pensar: “esta gente no necesita un préstamo”!
Un tema que se discute bastante en Kiva es porque algunos prestatarios son financiados más rápido que otros. Hay algunos patrones interesantes, específicamente que los préstamos en Asia Central tardan mucho más en ser financiados. Algunos argumentan que esto es porque las cantidades de los préstamos son más altas, pero hasta ahora he visto que en Mol Bulak Finance los prestatarios forman parte de grupos y el total de los préstamos no excede la cantidad de otros préstamos ofrecidos en el sitio Kiva.
Mi hipótesis es que la pobreza en países post-soviéticos no es fácilmente comprendida por naciones extranjeras. Kirguistán se independizo hace menos de dos décadas; es un país nuevo que antes de 1920, no tuvo amplia historia política. Como Kazakstán, Kirguistán siempre fue de una cultura nómada. La Unión Soviética cambio todo este esquema y agresivamente impuso nuevas normas políticas, económicas, y culturales.
No todo fue negativo; la Unión Soviética mejoro la calidad de vida en Kirguistán. La imposición de su sistema superior de educación, es un buen ejemplo. Los rusos se esforzaron para que toda la gente en Kirguistan pudiera ser alfabetizada. Por suerte, hoy Kirguistan sigue ofreciendo educacion publica a sus ciudadanes hasta noveno grado. Esto explica el alfabetismo excelente del 98.7%. Si uno compara esta figura con el 39.3% de Senegal (otra ubicación de Kiva) automáticamente, uno lo conecta con pobreza. Aqui es importante notar que el Producto per Capita PPP en Kirguistan es clasificado como numero 184 de 195 paises! (Estadisticas del CIA Factbook en internet).
Con el colapso de la Union Sovietica, Kirguizstan perdio su mercado enorme y al mismo tiempo empezo a sentir los resultados negativos de los anos de ocupacion en sus recursos naturales. Al final, el territorio ruso era lo más importante en la época soviética, “si para fortalecer el centro se precisaba, la política del pillaje en las aéreas bordeando Rusia no sería problema y seria la acción correcta”. (Fuentes tomadas de Kyrgyz Republic por Stewart y Weldon).
Hoy, Kirguistán tiene poca industria desarrollada. Después 70 años de ser administrada por una política soviética, la innovación no es accesible, emprendimiento es difícil. Las personas que viven bajo la linea de pobreza (40% del país) tienen una variedad muy limitada de trabajos: mayoritariamente comercio y actividades agropecuarias. Trabajando en agricultura es difícil porque para sobrevivir los granjeros tienen que aprender múltiples comercios. Por ejemplo, si un prestatario compra una vaca con su préstamo, ella no puede decidirse todo su tiempo al animal porque su salario no sería suficiente—aprendí que criar una vaca para que tenga crias o para comer lleva tres años. Este prestatario también debe: proveer un servicio para cuidar niños, crecer papas, y ser taxista.
Hace dos semanas, cuando llegue a la casa de un prestatario en Balykchi, empezó a negociar precios de pescado con el chofer del instituto de microfinanza. Yo estaba visitando para verificar que el préstamo se estaba usando para comprar una vaca, pero fui obligada a esperar 10 minutos para que el prestatario y el chofer terminen su negociación. Este prestatario no ganaba lo suficiente con sus actividades agrícolas y fue obligado a hacerse un pescador part-time.
Este tipo de pobreza es algo que nunca estudie en la escuela. La primera vez que vi los prestatarios de Kirguistán en el sitio de Kiva pensé que los prestatarios no precisaban la microfinanza, pero ahora, después de haberlo visto con mis propios ojos, aprendí que no es así.
Las fotos pueden enganar. Especialmente en países post soviéticos donde el recuerdo de una vida bien controlada sigue viva. Para sacarse una foto, o simplemente para salir a la calle, los ciudadanos se visten bien; la posibilidad de ser mal vistos por el público es demasiado dañina.
Eva Nemirovsky es un Kiva Fellow trabajando con Mol Bulak Finance en Bishkek, Kirguistán. Únete al Kyrgyzstan lending team. Hay prestatarios de Kirguistán que están con Mol Bulak Finance a quienes tú puedes ayudar contribuyendo a un préstamo hoy.
Kiva Love for Loan Officers
By Michelle Baker, KF11 Ghana
I spent the entire past week out in the field training branches and meeting with Kiva borrowers, and it was the most inspiring thing I have experienced in a very long time.
The loan officers are some of the most amazing people who I have met. Without their hard work, I am certain that microfinancing would not be possible. The loan officers that I met start their days before 8:00 a.m. and end as late as 11:00 p.m. They do not spend their days in a comfortable air-conditioned office, but instead spend most of their time traveling from rural town to rural town meeting with current and potential borrowers. They do not have cars, but instead must wait on the side of the road for a tro-tro (a mini-van packed with people) or a shared taxi. In the town of Kumasi, where I currently live, you will come across 10 tro-tros and taxis every 5 minutes, but in the rural areas, you may have to wait anywhere between 15 minutes to 1 hour for a passing tro-tro or taxi. Did I mention that it extremely hot and humid in Ghana?
These loan officers are dressed up in slacks, a long Oxford shirt, a tie and polished shoes. They often meet in churches that have a ceiling fan which really only moves the hot air around, but doesn’t really offer any relief from the heat. In one of the rural towns outside Kade, two loan officers met with over 30 groups of borrowers. Each group had 5 to 10 individual borrowers. These two loan officers collected repayments, offered training sessions and listened to any grievances that the borrowers had. They do this all with a determination and kindness that I am not sure that most people would be able to have, including myself. I asked one of the loan officers what he likes about his job, and he told me that he feels like he is providing a service to a community of people who are less fortunate than himself and really need the help. It was nice that he did not treat his work just as part of his job, but that he actually felt inspired about the work he was doing.
A photo of a Kiva team members collecting journal updates from Kiva borrowers.
I also got to meet some Kiva borrowers, and attempted to converse with them in their native Twi language. Well I shared the three phrases that I know! Mma ache, which means good morning. Wo ho te sen, which means how are you? Me ho ye, which mean I’m good. They loved it!
A few photos of Kiva borrowers.
Finally, the loan officers and the borrowers wanted me to tell Kiva and all the Kiva borrowers that they were so thankful for providing loans and how these loans have helped the borrowers to care for their families. I think the loan officers also deserve praise because without them, Kiva and Kiva borrowers wouldn’t be able to reach these rural borrowers!
Why I’m Not Eating a Kyrgyz Chocolate Bar/La razón que no como un chocolate kirguiz
By Eva Nemirovsky, KF11 Kyrgyzstan
It’s Friday night and I’m eating a Cliff bar writing in my Bishkek apartment. I arrived two weeks ago, so I still have a few Cliff bars left. Truthfully, I would rather go outside to the kiosk and buy some Kyrgyz chocolate, but everyone has warned me not to go out at night. I think my Mother would be proud because for once I’m actually listening to them.
When I first told people I was going to Kyrgyzstan they said “Kyrg…what!” followed by “didn’t they just have a coup?” I have become accustomed to calmly explaining that “yes, that is correct, on April seventh there was a coup and the President at that time (Bakiyev) was ousted from power—he barely escaped his white house in Bishkek and fled to the Southern part of the country, where his influence is greater. However, Bakiyev was eventually forced to resign and now a six-month interim government is ruling the land.” 
The outrage in April occurred because Bakiyev, who had taken power after the 2005 Tulip Revolution, had promised to improve the conditions of the country. Five years later, a monthly pension was only enough to cover utilities. Conditions were clearly not better.
Over 80 people were killed during the revolution, and from what I have observed thus far, this was a great shock and horror to Kyrgyz citizens. I visited the fenced white house, where the victims were shot by police, and saw that the gate was full of pictures and flowers. Upon looking at the pictures, I was alarmed to see many young boys fifteen years of age—I even saw a fourteen year old victim! 
This was definitely not what I had imagined. I realized what chaos must have ensued on those couple of days. I got the impression that the violence occurred just as much, or more, because of confusion than because of people’s convictions.
It is strange, before leaving San Francisco, so many people asked me about the situation in Kyrgyzstan that I was able to turn on my automatic pilot explanation “yes, that is correct, on April 7th…” One could say that I almost thought less about the revolution because of the bombardment of inquiries. I have lived in places with political turmoil before, but never one with violence so fresh on every citizen’s mind.
I think today was the first time in my life that a coworker said “I can take you shopping at the bazaar, but let’s wait until after the 40-day official mourning period since it may not be safe beforehand.” My coworkers at Mol Bulak Finance are not scared about their safety, but they are concerned about the welfare of their country. One goal of microfinance is to help develop poor regions and it is difficult to meet this objective when the government has little power, no focused direction, and few resources. The only thing left to do is wait, be patient, and help entrepreneurs whose businesses are moving forward regardless.
Eva Nemirovsky is a Kiva Fellow working with Mol Bulak Finance in Bishkek, Kyrgyzstan. Join the Kyrgyzstan lending team. There are borrowers from Kyrgyzstan with Mol Bulak Finance who you can help by contributing to a loan today, and many other entrepreneurs from around the world on the Kiva site.
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Por Eva Nemirovsky, KF11 Kirguistán
Estoy escribiendo esto un viernes a la noche desde mi departamento en Bishkek mientras como una barrita Cliff. Hace dos semanas que estoy, así que me quedan algunas barritas mas. La verdad es que me gustaría ir afuera al kiosco y comprarme un chocolate Kirguiz, pero todos me han advertido que no salga a la noche. Creo que mi madre estaría orgullosa porque por primera vez les estoy haciendo caso.
Cuando le contaba a la gente que me iba a Kirguistán me contestaban “Kirgui…que!?” seguido por “no acaban de tener un golpe de estado?” Yo ya me acostumbre a responderles, con mucha calma, “si, es correcto, el siete de abril hubo un golpe y al Presidente, en aquella época (Bakiyev), le sacaron el poder—apenas se pudo escapar de su casa blanca en Bishkek e irse al sur del país, donde su influencia es mayor. Aun así, eventualmente Bakiyev fue obligado a resignar, y ahora un gobierno temporario de seis meses está en poder.” Los problemas en abril ocurrieron porque Bakiyev, quien había tomado poder después de la revolución de Tulipán en 2005, había prometido mejorar las condiciones del país. Cinco años después, la pensión mensual solo alcanza para cubrir las expenses de la casa. Era evidente que las condiciones no habían mejorado.
Durante la revolución mataron a más de 80 personas, y por lo que yo he visto hasta ahora, esto fue un asombro y horror para los ciudadanos de Kirguistán. El otro día visite la casa blanca, que tiene rejas alrededor, donde las víctimas fueron matadas, en esas rejas ahora hay fotos y flores. Cuando mire las fotos, note que había varios niños de quince años—hasta vi una víctima de catorce! Definitivamente, esto no era lo que yo me había imaginado. Me di cuenta del caos que debe haber sido la revolución. Tuve la impresión que la violencia ocurrió más por confusión que por las convicciones de las personas.
Es raro, antes de irme de San Francisco, tantas personas me preguntaron sobre la situación en Kirguistán que aprendí a responder como una máquina “si, es correcto, el siete de abril hubo…” Quizás pensé menos sobre la revolución por la cantidad enorme de preguntas que me hicieron. Yo he vivido en lugares con complicaciones políticas, pero nunca en un país que ha pasado por violencia tan recientemente.
Creo que hoy fue la primera vez en my vida que una colega me dijo “te puedo llevar a hacer shopping en el bazar, pero esperemos hasta que termine el luto oficial de 40 días porque quizás no esté muy seguro si vamos antes”. Mis colegas en Mol Bulak Finance no tienen miedo, pero si están preocupados por el bienestar de su país. La meta de microfinanzas es ayudar a desarrollar regiones pobres y es difícil cumplir este objetivo cuando el gobierno tiene poco poder, insuficiente enfoque, y escasez de recursos. La única sugerencia por ahora es esperar, ser paciente, y ayudar a emprendedores quienes, por suerte, siguen con sus negocios.
Eva Nemirovsky es un Kiva Fellow trabajando con Mol Bulak Finance en Bishkek, Kirguistán. Únete al Kyrgyzstan lending team. Hay prestatarios de Kirguistán que están con Mol Bulak Finance a quienes tú puedes ayudar contribuyendo a un préstamo hoy.
Cows and Microfinance: Simply Bovine
By Peter Marchant, KF10 Azerbaijan
Cows are a perfect microfinance investment, and it’s not just their perfumed smell and cuddly good looks. (more…)
Capitalists are Kinder: Microfinance and Fairness
By Peter Marchant, KF10 Azerbaijan
A new study led by University of British Columbia anthropologist Joseph Henrich found that active market participants tend to treat strangers more fairly. To the extent that Microfinance encourages market participation and supplants the need for top-down development models like direct aid, these results indicate that it may also encourage borrowers to adopt fairer attitudes towards those outside of their immediate social circle.
A Different Kind of Borrower
Not all borrowers are using Kiva loans to start businesses, and this is a good thing.
The Forest Through the Trees
Several days ago I woke up at 4:30 in the morning because my high-power fan, which I position directly on me, three feet from my bed, had blown my sheet and fitted sheet completely off the mattress (yeah, I was confused too). In order to put an end to the hectic sheet flapping, I switched off the fan. Once I had restored order to my bed, I found a comfortable position and tried to go back to sleep. Then, two things happened that very quickly alerted me to the fact that I had forgotten to turn the fan back on.
Continue Reading 1 March 2010 at 08:19 bgoldfinger 10 comments
Why Charge Any Interest At All?
Microfinance interest rate discussions usually center on how much and often overlook the question of whether poor microborrowers should pay any interest at all. Kiva lenders are a philanthropic bunch. They could eliminate interest rates and cover administrative costs with donations, but for economic and ethical reasons they shouldn’t.
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
Not Your Average Courtroom Drama
The atmosphere was tense. All eyes were on the defendant, a small woman in her mid-thirties. She rose from her seat and softly explained her final argument– I know now that I’m guilty. I should have paid on time, but my children were sick. I had to take them to the hospital and could not be home when it was time to make the payments. I’m sorry I didn’t explain this to you sooner, but I didn’t realize how much this matters to the group. She slunk back into her chair, and the jury began to deliberate.
Looking Past the Picture
The photos on borrower profiles provide a key connection between Kiva lenders and the borrowers they fund, but lending based on snapshots has drawbacks. A photo can convey a lot about a borrower, a culture, a business or a life and create an emotional reaction for the viewer. Yet the very power of a picture can prevent lenders from learning the full story of a borrower and their country.
Continue Reading 15 February 2010 at 05:43 Peter 20 comments
How Kiva helps the poor deal with life’s uncertainties
By Adam Kemmis Betty, KF9 Bolivia
Those frustrated with the health-and-safety of Europe and North America often celebrate the apparent appetite for risk in countries such as Bolivia, where you carry your machete into the local bar or cram a dozen people into the back of your car without fear of reprimand.
Bolivia's famous "Death Road" has even become a tourist attraction
In fact, this tolerance for risk is largely borne out necessity rather than any deep-seated cultural predilection. The Bolivian poor spend a great deal of energy trying to minimise the risks and uncertainties in the lives. (more…)
Kiva and Empowerment
Gavin Sword KF9
I read with great interest the very thoughtful blog by David Roodman: as well as the more sensational New York Times article about Kiva’s loan disbursement disclosure issues. I agree that Kiva could have done a better job of explaining the nuanced realities of fund disbursement on its website. And I think that insightful blogs aimed at holding Kiva accountable are useful and will serve to strengthen the organization. But beneath all the controversy, for many, I think a line blurred between connecting to an individual and controlling an outcome.
As lenders we like to think we are really making a difference in someone’s life and we are…but it’s complicated and it actually bumps up against something we all value greatly about Kiva: Empowerment. For three key stakeholders: lenders, borrowers and MFI’s – empowerment is key.
My Kiva Fellowship kicks off in 5 hours…
By Dennis A. Espinoza, KF9 Cameroon
Saludos Kiva Community –
My name is Dennis Espinoza and in a few hours I will be leaving for Africa to serve with GHAPE, a longstanding Kiva partner based in Cameroon.
Before I kickoff the 25 hour trip from Chicago, USA to Bamenda, Cameroon, a personal note about the reason I’m on this journey and what I selfishly hope to get from it….you know, beyond just a great way to meet great likeminded people, i.e. cute ladies (which it is for those of you who are considering applying to the program!).
In search of Kiva’s highest microloan
By Adam Kemmis Betty, KF9, Bolivia
Kiva’s website provides a wealth of statistics for curious lenders, but one unfortunate and disappointingly uncontroversial omission is the altitude at which the loan was disbursed. With the average borrower living at 4,150 m (13,615 ft) above sea level, I’d be willing to bet that Pro Mujer Bolivia would be a good place to start in any search for Kiva’s highest microloan (any challenges from Peru or Kyrgyzstan?).
On top of the world: El Alto, Bolivia
Growing a Business, Saving a Child
An estimated half of Kenyans with AIDS are receiving anti-retroviral treatment, only about a third of Kenyan children are. How can micro-loans help change this?
Continue Reading 29 May 2009 at 06:36 Brett Dobbs 3 comments
Does Business Diversification Reduce Risk or Increase It?
Perhaps it depends on the context.
Now having served as a Kiva Fellow at three of Kiva’s partner microfinance institutions (MFI) in three distinct locations, I have seen a wide variety in the types of businesses Kiva lenders are funding. I have also seen many, many situations where one client has several businesses. In a recent blog post, Stephanie Koczela, a Kiva Fellow in Uganda, very articulately explained how and why microfinance clients often have a variety of businesses. As she describes, not only is this the reality, it actually makes a lot of sense and helps these clients reduce their vulnerability to bad weather, fluctuations in supply and demand, price instability in certain products, etc.
Given that microfinance clients often operate several businesses concurrently, in my first two placements it was not uncommon for me to discover that clients had not bought what they originally said they would when they requested the loan. As a Kiva Fellow, part of my job is to verify that the clients do indeed exist, have received the amount of money they were supposed to, and that they are using the loan to invest in their business as they said they would. Accordingly, when I first heard of clients not using their loans as they said they would, it bothered me a bit.
However, in talking with the clients and with the MFI staff, I quickly learned that, of course, the clients know how best to manage their businesses. Circumstances often change. Perhaps when they first requested the loan, the upcoming planting season looked promising, so fertilizer and seeds seemed like the smartest investment. But by the time the paperwork was done, the loan funded on Kiva, and the client received the money, a tropical storm led to flooding and the soil needed time to recover. So rather than sit and wait, the client turns to other skills she has. She wisely purchases thread and, as she’s waiting for the fields to dry and to see just how rainy this rainy season will be, she is able to weave and embroider beautiful blouses that she can sell for a nice return.
All of this made sense…until I arrived at ADEPHCA in Bluefields, Nicaragua. As I’ve described in previous posts, Bluefields is a unique place and microfinance faces unique challenges here. Because there is so little industry, clients are generally quite limited in terms of kinds of businesses they can operate. I recently visited a prospective client with ADEPHCA’s loan officer, Guillermo, to see her business and talk about a loan for her. She has a very small store in the front of her home, with a very meager supply of basic daily consumption items such as rice, beans, and toilet paper. As soon as we arrived she launched into a very animated and enthusiastic explanation of her desire to start buying used clothing and selling it from her open front porch. Guillermo promptly explained that ADEPHCA only makes loans for clients to invest in established businesses that they have had for a minimum of one year.
ADEPHCA does not view having a variety of businesses as a positive thing. After seeing and understanding the value of having multiple businesses, I was initially confused and a little troubled by this position. But once again, I was reminded of how much I have to learn. Development is definitely not formulaic and Bluefields, Nicaragua has taught me firsthand how much specific geographic, cultural, political, and economic contexts can dramatically impact what can and cannot work. Rules of thumb that seem to apply elsewhere cannot be taken for granted here. Because nearly all industry in Bluefields is related to direct consumption (food, clothing, basic necessities such as toilet paper and soap, and maybe some basic construction materials), nearly all businesses will be affected similarly if there is a problem such as a natural disaster or an economic downturn. In other regions, having a variety of businesses might mean a small store, raising some animals, growing some crops, and selling clothing. In Bluefields, this kind of variety simply does not exist, so having multiple businesses does not necessarily lead to meaningful diversification and more reliable sources of income.
In general, I’m still a firm believer in diversification. Nevertheless, ADEPHCA certainly has some valid reasons for choosing to lend only to established businesses and encouraging clients to focus on growing the one business they have. That said, one thing that has troubled me since my arrival in Bluefields, is the big question of why there is so little industry here, and what would happen if someone made an educated, thorough, and well-funded effort to develop new industry. Would it be possible, with the right resources, to increase agricultural production in this sparsely populated region? Why don’t more people raise chickens in their backyards? Costeños pride themselves on their culture, so why aren’t there more local handicrafts? ADEPHCA is very small and simply does not have the resources to promote the development of new businesses. Nevertheless, I hope that someday, someone does invest in Bluefields a little more. I’d love to see what potential really exists here. In the meantime, I definitely have a newfound appreciation for how much context influences how microfinance works in a given place.
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Megan Tatman Montgomery is in her final week as a Kiva Fellow at ADEPHCA in Nicaragua. Prior to ADEPHCA, Megan served as a fellow at Friendship Bridge and FAPE in Guatemala, and will soon head to Costa Rica for a fourth and final placement with EDESA.
Welcome, Kiva, to West Timor!
West Timor is the country equivalent of Robert Downey Senior. The usual reaction is “West Timor? I didn’t know there was a West Timor. But I’ve heard of East Timor so I suppose it makes sense”.
And indeed it does make sense, especially if you live here. West Timor, formerly a Dutch colony until it was un-clogged in 1945, is on an island towards the eastern side of Indonesia (Timur conveniently means “east” in Indonesian) but, it should be stressed, not the most easterly island as that is Papua and or West Papua (to clarify please see www.google.com), and is attached to East Timor, who (in)famously fought for and gained independence from Indonesia in 2002. It forms part of the Indonesian province of East Nusa Tengarra, the poorest of all thirty-three provinces in Indonesia. It is also home to TLM, one of the newest Kiva field partners.
Tanaoba Lais Manekat (“Serve With Love”), or TLM for short, is a Christian organisation founded by the protestant church in 1994. Around eleven thousand clients are recipients of the TLM loans (and love) within the province. Some of the fortunate ones will shortly be receiving some Kiva love too!
TLM are aiming to grow their operations and client base rapidly, and Kiva is a big part of these plans. They are currently in their pilot phase so if you manage to find one of their loans before it’s fully funded, count yourself lucky! TLM loans are so hot right now.
In return for your loans, TLM are showcasing a unique-to-Kiva cashless cow-fattening loan where the borrower receives a skinny cow and one year later shares the profits from the sale of the (hopefully) fatter cow. Your repayment is genuinely dependent on how much a cow eats. Will you find a cash cow? Or will you be left crying over spilt milk?
We need your help to get fat!
Below is a video introduction to TLM featuring a trip into the beautiful Timor countryside and some heroic tree climbing.
Ways to support TLM:
Join the TLM lending team on Kiva
Follow TLM on Twitter! Kiva Coordinator Shanty, probably the only twitterer in West Timor, will be keeping TLMs twitter feed updated with all of their Kiva activities. Be the first to know when new TLM loans are posted!
Check out all TLM loans currently fundraising on Kiva here and make a loan!
Kiva Fellowships are unpaid voluntary positions and I totally forgot to do any fundraising for mine. If you would like to help me out in any way, you can donate to me here. I wish I’d thought of this earlier. Thank you. Kieran
Literacy and Child Labor in Bluefields, Nicaragua
Having spent two months in Bluefields, Nicaragua now, I have been struck by the near absence of two characteristics common in impoverished areas: illiteracy and child labor. This statement is based purely on my own observation. Unfortunately very little statistical data exists for this region. Nevertheless, what I have seen here in terms of these two particular, yet intimately related, challenges to development is one of very few things that gives me hope and even a little optimism for future development here.
When interviewing recipients of Kiva loans, I often ask the client how many years of schooling they have had. If they have had very little, I follow up by asking if they can read and write. In my first placement as a Kiva Fellow in Guatemala, less than half of clients I interviewed were literate. It was not uncommon to see loan documents full of fingerprints instead of written signatures, as many clients could not even write their own names. Yet in Bluefields, far more isolated and with far fewer opportunities in many respects, only one client out of the dozens I have interviewed has been illiterate. And despite the fact that he cannot read or write, he worked diligently with his wife to make sure he would be able to sign his name on the loan documents.
As I realized more and more that ADEPHCA’s (Kiva’s field partner in Bluefields) clients are nearly all literate, I began pondering why that might be. ADEPHCA does not currently provide loans to start up new businesses, only lending to those that already have a business. So perhaps this requirement rules out the truly poorest of the poor, which are more likely to be illiterate. Nevertheless, I still got a general feeling that literacy is more common than one might expect in an area as underdeveloped as this. The Nicaraguan government has had several waves of literacy campaigns, starting in the early 1980s and off-and-on up to the present. These campaigns have been declared a great success, though some question the reliability of the related statistics that have been published. Hard data aside, I have observed two specific signs that reinforce my belief that literacy is surprisingly high here.
For one, there is virtually no child labor here. Nicaragua is now the fifth Latin American country I have lived in, and I have traveled in many other developing countries in Latin America and other parts of the world. In all of them, I have seen children working all hours of the day and night, selling local handicrafts, fruits and vegetables, washing windshields, juggling on street corners… Families often do not have the small amounts of money needed to pay school registration fees and buy uniforms and school supplies. Instead of going to school, children are needed to help contribute to the family expenses and spend their days in whatever income generating task they have access to. The cycle of illiteracy persists.
Yet when I ask ADEPHCA’s clients if their children are in school, I have been told “yes” every time. And as I walk the streets of Bluefields on weekdays, nearly all of the school-aged children I see are in neatly pressed uniforms and carrying backpacks.
My second source of optimism is very anecdotal, but interesting nevertheless. I currently live with a Nicaraguan family. I have a “little sister” here that is in her last year of high school. Before she can graduate, she is required to spend at least 30 hours tutoring an illiterate person in the community. I’m still not entirely clear on the details of how she is supposed to find this person or if she is given any sort of guidance as to how best teach literacy. Nevertheless, the fact that this is a requirement for all students before they can graduate from high school is a quite remarkable indication that Nicaragua cares about literacy and aims to do something about it.
So while I still don’t know if the fact that nearly all ADEPHCA clients are literate is a reflection of successful literacy campaigns and an understanding of the importance of literacy or if it’s because they are not currently lending to the poorest and illiterate portion of the population. What I do know, though, is that nearly all children that I have seen in the area are in school. Furthermore, these children are required to promote literacy among others as part of their school requirements. These two very basic facts give me hope that the region is making important strides in the right direction to combat poverty and improve quality of life. And as the general population becomes increasingly educated, microfinance can be increasingly instrumental in providing opportunities for the poor to channel their higher level of education into productive, income-generating businesses.
Microfinance Challenges in Bluefields, Nicaragua
Preface: I recently posted a blog describing some of the unique challenges people in Bluefields must deal with. I’d like to encourage those of you that haven’t already seen it, to first click here to get a bit of context before reading this post.
Microfinance faces some unique challenges in Nicaragua, and especially in the southern Atlantic Coastal region. This is my third placement as a Kiva Fellow (meaning the third partner microfinance institution I’ve worked with), and I have thought more deeply about poverty, development, and the role of microfinance in my first three weeks here in Bluefields, Nicaragua, than I did during my entire 3 months with field partners in Guatemala. Why is that, you ask? Because things were going relatively well in Guatemala. The MFIs were mostly self-sufficient, lots of loans were made, and nearly all were being paid back. Things are not going as well here in Nicaragua. Don’t get me wrong, there are certainly some success stories here; examples of people using Kiva loans to expand their businesses, increasing their income and successfully paying back the loan. But there are also many stories of people not paying back on time, if at all. Delinquency and default rates in Bluefields are substantially higher than what is standard in microfinance.
In talking with staff at my MFI and others in the area, I’ve heard a few theories as to why that is. Here’s a summary of the arguments, as they’ve been presented to me:
1. It’s a cultural thing. Some people here just don’t care about the commitment to pay back. Some people just aren’t responsible. A lot of people lie about what they are going to use their money for, when they’re going to pay, why they can or can’t pay, etc. There are definitely a lot of trust issues. Furthermore, things like solidarity groups to share the responsibility of repayment among many clients are reportedly not realistic here, as people are simply not willing to back their friends and neighbors financially.
2. Donations. This area is among the poorest in a country that is the second poorest nation in the western hemisphere. Over the years, few organizations have really invested in development here. Instead, the Nicaraguan government and well-intentioned NGOs have donated a lot of money. So the ultra poor have gotten handouts when they need it most, and sometimes otherwise. Accordingly, there is now an expectation, among some, that if things get bad enough, someone will come along with handouts for them. Evidently many prefer to wait for those handouts, rather than get in a situation where they have to pay back a loan. Furthermore, those that do take out loans, may have a somewhat clouded understanding of what a loan is, since they have grown up accustomed to charity, which obviously involves no repayment.
3. Lack of education and training. Many microentrepreneurs do not have much knowledge of basic business administration and money management, so they don’t have a good grasp on managing pricing, savings, etc. to be able to pay back successfully.
These are the most common explanations I’ve heard in talking with people that have been working in microfinance here for awhile. The first two theories are tough – in terms of measuring and defining and in terms of overcoming. The third one, however, holds a lot of potential, as this is certainly something that can be measured and largely overcome with the right training. Of course such training requires time and money, neither of which seem to be readily available in Bluefields.
While there is clearly no simple answer to the question of why some people repay their loans while others do not, I do believe that witnessing the challenges here is giving me greater insight into both the potential of microfinance as well as its limitations. The thing that I currently struggle with the most is how damaging delinquent and defaulting loans can be for individuals, communities, and the microfinance industry in the region. Taking out a loan, building a business, and paying off that loan is an incredibly empowering thing for anyone, and especially for the poor who have had so few opportunities. So I can’t help but think about how, on the flip side of that, failing to pay off a loan is the opposite of empowering. It seems like failure to fulfill loan obligations could cause a person to lose faith in their abilities, can damage their sense of responsibility, and certainly limits future opportunities. So the big question is: what can microfinance institutions do to ensure that the clients they are lending to are set up for success? What can and should be done when evaluating a new client for a loan to select clients that will be empowered by their loan? How do you know which prospective clients are trustworthy and responsible and entrepreneurial enough to be a good candidate for a microloan? And what can be done throughout the life of the loan and beyond in order to increase a client’s success in their business and repayment of the loan?
These are tough questions, with no easy, formulaic answers. What I find most disturbing though, is the argument that the success of microfinance is predetermined, to some extent, by the cultural conditions of an area. I really don’t want to believe that there are simply some areas where microfinance will never work because the people are not responsible or trustworthy. I hope to gain greater insight into this theory and other limitations of microfinance in the coming months.
