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Tuesday, November 1, 2011

Kiva revisited

This blog is currently under attack from a new generation of comment spambots. (Perhaps this is karmic justice for my having neglected blogging; mea culpa!). They apparently get by the "are you sentient?" question, and they quote bits of the blog entry itself to make their text look reasonable.

I'm cleaning them out, but this has the side effect of my revisiting old entries. I just reread my advice on Kiva vs Grameen from 2007 and realized it's somewhat inaccurate, and I've become a bit more skeptical over time.

It's true that Kiva lenders don't get interest, and that Kiva lives on explicitly marked donations from those lenders. So all the money does flow to the NGOs. Also, I think the fact that the "give money directly to this guy" look & feel is more or less an illusion, and that the money actually funds NGOs (with a loose accounting connection between the NGO's books, your loan, and that guy), is a feature, not a bug.

However, it's also true that the NGOs in some cases charge (what seem in the rich world to be) insanely high rates of interest to the actual borrowers. It may be that in order to make this sort of thing sustainable, given various conditions in poor countries -- difficulties of travel and administration, currency and inflation risks, etc -- these rates make some kind of economic sense. But they change the picture drastically. You are not now talking about giving people in the poor world access to the same kind of credit arrangements that people in the rich world have. You are talking about backing them on a high-risk gamble.

The various NGOs Kiva funds vary widely in how much interest they charge. Kiva does expose this information, but you have to dig for it -- which I consider a serious flaw in their UI.

I still have a bunch of money parked at Kiva and am adding to it, because I like to use Kiva as a "third alternative" between banking and donation -- money I want to put in the service of doing good, and am willing to temporarily forgo interest on, but am not sure I can actually afford to part with in the long term -- I am now very picky about which Field Partners I lend through. I collect those with what appears to be relatively low Portfolio Yield (which equates directly to how much they charge borrowers, I believe) for their geographic region, and reasonable risk.

For those playing along at home, here's my current list:

Loans from CREDIT (Cambodia, 28% Portfolio Yield)
Loans from Imon (Tajikistan, 37.7% Portfolio Yield)
Loans from Kadet (Kenya, 27.1% Portfolio Yield)
Loans from Maxima (Cambodia, 29% Portfolio Yield)
Loans from Ryada (Palestine, 17.1% Portfolio Yield, delinquency issues but progress on them)

Loans from Cooperativa San Jose (Ecuador, 15.2% Portfolio Yield)
Loans from Ameen s.a.l. (Lebanon, 18.72% Portfolio Yield, delinquency 7.52%, loans at risk 15%, default 0%)
Loans from XacBank (Mongolia, 21.2% Portfolio Yield, delinquency 0.07%, loans at risk 0.30%, default 0.11%)

Feel free to let me know if you spot one that should be added here!

Posted by benrosen at November 1, 2011 03:40 PM | Up to blog
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