I once supported Kiva as I thought that even when flawed, it’s doing its best to support people. But now I see that they don’t even try.
- Image by DennisSylvesterHurd via Flickr
I was a cautiously-neutral to the service of Kiva. Even though I was excited when I first discovered it, the criticisms of micro-lending and the fact that such a service is impossible to make any actual change and serves mostly to give a “feel-good” feeling to people in the developed nations made me lose a lot of that excitement.
Still I still had made a few loans at the beginning, and as those were paid back, I simply re-loaned them to people who would be charged as close to 0% interest as possible. Unfortunately. Kiva makes this selection extemely hard. Harder than it needs to be. Not only do they not display the interest the partner will charge to the person you are considering giving a loan to, but the interest rate charged by a partner is also the last thing you’ll find about them. It’s like Kiva is consciously trying to cover up the absurd fees some of their partners are charging. They do not even provide a search function based on interest rates which would at least come extremely handy.
But still, until now I was tolerant to the idea of Kiva mostly because even though most of their partners where charging a high amount, it was still lower than the median rates of their area. However this has now changed for the worse. Not only do most partners now seem to hover around the median, but I’ve just seen one of the most digusting examples I could find within Kiva
This partner charges double the interest and makes double the profit that most lenders in their country. This is a loan-shark put simply. And yet. This is a Kiva partner. Pathetic. I don’t even know if this partner existed like this from the beginning of Kiva or if they increased their interest rates later on. Their URL number seems to indicate that they were one of the earliest.
This is the last straw for me. I can’t even remain neutral in the face of how Kiva uses the mutual-aid sentiments of people to support the debt-enslavement and debt-abuse of the most unfortunate. Until Kiva can provide a way where people can discover those partners which charge close to 0% interest (Do you have any anymore Kiva?), then I would suggest you stay away from it. It seems Kiva is simply becoming a useful tool in the hands of those who only wish to profit on the backs of the poor.
That is disappointing indeed. I know many atheists who have flocked to Kiva as a way of showing that atheists do indeed support charitable giving. It sounds like there are better options to consider.
Have you contacted Kiva regarding the inability to sort on partner's interest? Or on the interest by that particular partner? Perhaps it's an opportunity for someone near them for fund a new partner?
Kiva's reply is that, you know, their job is soooooo hard that you should just accept it.
FINALLY! Someone else joins me in my crusade against Kiva! DB0, I'm so glad it's you buddy!
Anarchists have been berating me for being against Kiva for so long, you wouldn't believe how happy I am to see this. If I were gay, I would give you a blowjob.
People were grilling you for flying right off the handle again, not for the criticism per se.
What? No. They were talking against my criticism.
If you haven't read this yet, it's interesting, explaining why the microfinance industry is so attractive to the West: Not all poor people are entrepreneurs – http://socialentrepreneurship.change.org/blog/vie…
It's clear none of you live in the developing world or know much about banking. while your one example seems quite legit, using 'as close to 0%' is ignorant. You do know that there are many middlemen to make any operation work, especially KIVA's model, and they have to make money somehow. If anything, using the median interest rate would be most appropriate. Microloans will by definition, default more often than the usual larger loans, making them more risky, increasing their interest rates (they also more often occur in more remote locations, adding expense to the process). There are some microloan organizations that are not set up like mini-banks and are built around community trust (usually the paid back loans go directly to the next applicant in line, so if the first defaults, the second never gets the loan), these can be close to 0% or often times have no interest, but that's completely different than Kiva.
Because your average westerner, including most of you and myself, doesn't have the time to do the research and find out what a fair market interest rate is in any given country (much less, way out in the bush of that same country) it seems appropriate that they would hide that from the Kiva donors. I know that's kind of anti-western (give us all the info and we'll decide for ourselves) but in this case, you all are proving you can't make the right decision with the information.
I PRAY that Kiva is on top of this an handling it so that there are not outrageous interest rate charged in the areas where it is inappropriate. At some point, you have to give TRUST to the middleman. That's what they are there for. If you don't trust them, then call them out on it.
I hope that you actually attempted to discuss this with Kiva before writing your post about this.
You didn't actually read the entry, did you? He actually DID compare the Kiva Partners' rates with median rates in those areas. Barring the fact that interest rates are usurious by definition, which should disgust any anti-capitalist, and the fact that their rates are criminal by the definition of many Western areas, the fact that their interest rates are even higher than the median is really the cherry on the sundae.
While requiring to make a profit might work as an excuse for a profit-making business like a bank, it doesn't apply when we're talking about mutual aid idea such as funds to the poor. If there are running costs, then the institution running the microfinance should charge it to the lenders, who should be naturally be able to see what percentage of their money is going towards running the microfinance institution (as it may be something obscene). The interests only obscures this.
Furthermore, the "risk" argument does not apply here because those microfinancers are not using their own money people in Kiva already know what they're getting into and the microfinancer in this case is taking no risk since it's not their money. Let people know how many loans that person has taken and what kind of business/person they are and let us decide. The argument that we're too stupid to know who to loan to and should just rely on blind trust sounds exceedingly naive and insulting.
It doesn't matter if westerners have the time or not to do research if they don't even allow us to try it. As it happens, I do have the time to research how I'm providing mutual aid and funding loan-sharks is not my idea of helping.
What also interests me what happens in default case? Since the microfinancier takes no risk, and default rates are very low, my best guess is that that in the end the borrowers loose all. However, this i scompletely intransparent to me. Any sources for research available? Thanks in advance.
Why? What's the point. It's not like they do not know the interest rate this firm charges. After all, not only did they put the numbers in but they also did an investigation on them apparently.
People like you always like to complain sitting behind their nice computer desk pretending to be a champion for the needy. What have you ever done for somebody in need? What do you know about going for days without food? Have you even ever been to an underdeveloped country?
Have you? And please tell me how loaning money at 60% interest is going to help the poor get food? Are you suggesting they buy food with these loans maybe?
In any case, you're performing an ad hominem fallacy.
How about just GIVING PEOPLE MONEY??
Ah man that sucks
I have KIVA loans thru this partner, and only yesterday I helped a friend with a KIVA gift certificate make a loan and the person they chose was under this partner.
On MY recommendation too. I pointed out how they could check the partners' reliability etc. but didn't check the rate being charged
Grrrr!
Yep, one of the most frustrating things is how difficult it is to see this very important information quickly.
Hello db0 – I work at Kiva and saw your post. I wanted to highlight a couple of things.
1) The Average Loan Size at SAT is much lower than the median in Ghana.
You can see what I mean in the table you uploaded earlier: http://dbzer0.com/wp-content/uploads/2010/06/kiva…
It’s much more expensive to offer small loans to poorer borrowers, than it is to offer larger loans to a richer clientele. Smaller loans require higher interest rates. Here is a good post by a non profit called MF Transparency on the subject:
“When considering other factors that affect the price of small loans, it is imperative to incorporate the effect of loan size as well. With larger loans it is often the case that the effect of loan amount can be largely discounted, and the focus can be put solely on other factors, such as the effect of the riskiness of the loan on loan price. Or of how profit margin relates to loan price. However, for microloans, it is first necessary to control for loan size.” http://www.mftransparency.org/pages/2010/05/14/25….
2) SAT serves poor rural communities
SAT is extending into the north of Ghana where poverty runs deeper and infrastructure is poor. This also increases costs. When our team visited Ghana, they spent four hours on dirt roards going from West to East in the northern portion of Ghana.
Serving poor rural communities is much more expensive than cherrypicking urban communities with dense populations. SAT is a non-profit though, so they’re able to maintain their focus on serving the poor even though it’s not as profitable.
3) Return on Assets should be adjusted for inflation
Ghana has a high inflation rate (2008 estimate is 19.6%). If you adjust SAT’s ROA of 6.01% for inflation, the real rate of return is 2.94%. That rate of return is consistent with a sustainable MFI…
4) Microfinance Institutions should be sustainable organizations.
After reading your post, I realized that we shouldn’t be comparing our field partners to the median for all MFI peers in a country – since several of them are bleeding cash and are not charging enough interest to even break even. We will look into focusing our median stats on MFIs that are charging sustainable interest rates. That should give a much more accurate picture of whether or not our field partners are charging appropriate interest rates.
—–
Finally, I wanted to respond to your question about whether or not Kiva can “provide a way where people can discover those partners which charge close to 0% interest.”
I’d like to add a sortable field for Portfolio Yield (i.e. fees and interest) to our list of Partners: http://www.kiva.org/partners/
While we look into that, I wanted to clarify that microfinance has a very cost-intensive model: loan officers often visit borrowers at their homes, and spend hours traveling over dirt roads in rural populations. This blog post by one of our Kiva Fellows highlights some of these issues: http://fellowsblog.kiva.org/2010/01/07/bad-roads-…
The industry is making huge strides towards becoming more efficient and lowering interest rates. According to CGAP, interest rates for sustainable microlenders average 26% and have been falling by 2.3% annually: http://www.cgap.org/p/site/c/template.rc/1.9.9534…
One last thought: you may be interested in some blog posts written by our Kiva Fellows who have worked in Ghana and/or at SAT:
* http://fellowsblog.kiva.org/2010/05/26/sinapi-aba…
* http://fellowsblog.kiva.org/2009/07/17/on-committ…
* http://fellowsblog.kiva.org/2009/09/11/last-thoug…
I hope these blog posts by some of our Fellows give some context into how SAT operates. If you have any questions, please let me know! I am at john at kiva dot org.
Best,
John at Kiva
From what I understand the employees of the loan companies wages are paid through the interest that is charged on the loan. If they charged o% interest there would be no employees and therefor no Kiva. These loans also appear to need a high level of loaner participation which also requires someone be paid to teach loanees about loan and business practices. That all costs money. It isn't like the Western world where we are all already familiar with business and the information is readily available.
you people are all id**ts. if you got the cash go to these places and talk to these people instead of comparing your di**s here
and loaning to kive gives the locals just one more option nothing else
This is an interesting post. I recently contributed to Kiva, and found their transparency…questionable. They do display interest rates of lenders, but you have to do some work to get there. They also claim that they do not lend to 'exorbitant' lenders. But the organisation I was lending to was apparently charging its customers 27% on a loan. 27%? If you saw a bank advertising a credit card at 27% interest, you'd run a mile, and credit cards are well known as an expensive way to borrow money. So what does Kiva call 'exorbitant'?
Hello,God Is Good All The Time,
My Name is Mrs Olivia Alexandra i live in Canada Wood Buffalo and life is worth living comfortably for me and my family now and i really have never seen goodness shown to me this much in my life as i am a struggling mum with 4kids and i have been going through a serious problem as my wife encountered a terrible accident last weeks, and the doctors states that he needs to undergo a delicate surgery for he to be able to walk again and i could not afford the bill for his surgery then i went to a bank in canada for a loan and they turn me down stating that i have no credit in my account, from there i run to my father and he was not able to help, then when i was browsing through yahoo answers and i came across a loan lender Mrs.Melisa Slaton who provides loans at an affordable interest rate 2.5% and i have been hearing about so many scams on the internet but at this my desperate situation, i had no choice than to give it an attempt and surprisingly it was all like a dream, i received a loan of $50,000.00 USD and i payed for my husband surgery and thank GOD today he is okay and can walk and is working and the burden is longer so much on me any more and we can feed well and my family is happy today and i said to my self that i will shout aloud to the world of the wonders of GOD to me through this GOD fearing lender(Mrs.Melisa Slaton) and i will advise anyone in genuine and
serious need of loan to contact this GOD fearing woman via: melisa.slaton253@gmail.com and i want you all to pray for this woman for Gods Blessing.Thanks
Mrs Olivia Alexandra
Good day Every One.
I can’t hide this great testimony that take place in my life I love everyone to know it and be partaker that is why I always place it on answer, I am Mrs Charity James by name, I live in Tennessee United State, I want to thank Mr.David Schield for his kindness upon my family life, I never knew that there is still nice lender like this on internet and earth here. Just some days I was in search for a loan of $ 90,000 Dollars; as I was running out of money for feeding School fees and my bills include rent. I was scammed about $6,000 Dollars and I decided not to involve my self in such business again but A Friend of my introduced me to a loan firm due to my appearance and doings. and I told her that I am not interested of any loan deal anymore but she told me that there is still a nice lender who she will recommend me to, and I made a trial and I am most grateful lucky am I today, I was given a loan amount of $100,000 Dollars by this great Company (DAVID SCHIELD LOAN INVESTMENT} managed by Mr.David Schield.If you are in need of a genuine or legit loan or financial assistance and you can be reliable and trusted of capable of paying back at the due time of the funds I will advice you to, contact him via (davidschieldloaninvestment.link@usa.com) And you will be free from scams in the internet. My lovely Husband extend is greeting to the world also if not for Mr Isaac Robinson I can’t imagine the way life should be for my family today. Please I am begging everyone to help me thank Mr. David Schield and I will always being sharing this great thing that happen in my life in answer everyday. You are the one who remove me and my family out of poverty, my family extends their greeting to you
T MARY FINACIAL LOAN FIRM
EMAIL ADDRESS—stmaryfinacialloanfirm@gmail.com
*************************************************
*************************************************
Welcome to ST MARY FINACIAL LOAN FIRM we are international Christian loan firm and Lenders that has offered Loans to various individual and firms in Europe, Asia, Africa and other parts of the world,Are you in need of a loan? Do you want to pay off your bills? Do you want to be financially stable? We offer all types of loan,
Services Rendered include;
*Refinance
*Home Improvement
*Investment Loan
*Auto Loans
*Debt Consolidation
*Business Loans
*Personal Loans
*International Loans
************************************************
************************************************
1)YOUR NAME……………….
2)YOUR COUNTRY…………….
3)YOUR OCCUPATION………….
4)YOUR MARITAL STATUS………
5)PHONE NUMBER…………….
6)MONTHLY INCOME…………..
7)ADDRESS…………………
8)PURPOSE OF LOAN………….
9)LOAN REQUEST…………….
10)TELEPHONE………………
11)LOAN TERMS AND DURATION…
STAY BLESS
REV.DANIEL IFADA
SIS.NICOLAS [ASST]
ST MARY FINACIAL LOAN FIRM
EMAIL ADDRESS—stmaryfinacialloanfirm@gmail.com
GOOD DAY to you I am Mr John Emmanuel, a Reputable, Legitimate & an
accredited money
Lender. I loan money out to individuals in need of financial assistance.
Do you have a bad credit or are you in need of money to pay bills?
i want to use this medium to inform you that i render reliable beneficiary
assistance as I’ll be glad to offer you a loan at 2% interest rate to
reliable individuals.
Services Rendered include:
*Refinance
*Home Improvement
*Inventor Loans
*Auto Loans
*Debt Consolidation
*Horse Loans
*Line of Credit
*Second Mortgage
*Business Loans
*Personal Loans
*International Loans.
Please write back if interested.
Upon Response, you’ll be mailed a Loan application form to fill. (No social
security and no credit check, 100% Guaranteed!) I Look forward permitting
me to
be of service to you. You can contact me via e-mail Johnemmanuelloanfirm@gmail.com or
Johnemmanuelloanfirm@outlook.com
Yours Sincerely
MR John Emmanuel ( MD)