KyRoamer

Offers to make two Kiva loans for every Zidisha loan would seem a great benefit to kiva. Both are non-profit micro finance sites. Kiva does not have a large following here. Zidisha's following is much less.

Maybe we need a single non-profit micro finance forum to cover both.

What patience? Us? Well maybe .... sometimes.

groobie

Just signed up and made two loans.

Jenbel

^^ welcome to the club

scjmc

I'm in! Thanks for organizing, JDiver!

NauticalWheeler

Can anyone confirm what interest rate Kiva field partners charge borrowers? I just want to make sure this is not a finance company in disguise for those who can least afford it.

Another poster compared Kiva to Zidisha and implied the Kiva interest rate was 30% or more.

http://saverocity.com/blog/zidisha/

onthego15

Interest rates vary enormously from field partner to field partner. Each field partner does. And I am sure that interest rates vary from borrower to borrower. That specific information is not available.
In my opinion it is totally inappropriate to compare the field partners Kiva works with to lending agencies

One of the primary reasons that Kiva's field partners charge higher interest rates is because they do so much more than just lend money. They provide training, financial counseling, education, a wide variety of social services, help borrowers connect with other borrowers for support and much more. Also, many of these field partners work in remote, impoverished and even war torn areas that no one else will even touch. Kiva's field partners are MUCH MUCH more than lenders. They provide an entire support system. Comparing them to someone who only provides lending is very unrealistic. You wouldn't compare Bank of America to a small, local non-profit community development agency, so Kiva's field partners shouldn't be compared to a lending agencies.

JY1024

Team stats as of Dec 17, 2012:
Stats as of 2/5/2013:

Number of Team Members: 367
Number of Loans attributed to this team: 9,926
Total Amount Loaned: $375,450

Looks like we've gotten over 20 new members over the last six weeks! A hearty welcome to you all! ^

(Also looks like we'll soon hit our 10,000th loan for the team! w00t w00t! )

brooklynmatt

Which one is the Bank of America in your analogy? I got confused?

Perhaps the primary reason that Kiva's field partners charge higher interest rates is BECAUSE THEY CAN.

Within the altruism there is abuse.

Not good to hide from it, best to shine a light and clean it up. Kiva is awesome, but flawed, lets make sure that the end user (who we are all trying to help) is not forced into paying these incredible rates of interest.

Awareness and Competition- that is what is needed to push Kiva to the next level.

Disclaimer- I have over 100 active Kiva loans and continue to loan to them.

brooklynmatt

From the NYTimes, talking about KIVA partner LAPO, by shining a light they were caught out and action was taken.:

Under outside pressure, LAPO announced in 2009 that it was decreasing its monthly interest rate, Planet Rating noted, but at the same time compulsory savings were quietly raised to 20 percent of the loan from 10 percent. So, the effective interest rate for some clients actually leapt to nearly 126 percent annually from 114 percent, the report said. The average for all LAPO clients was nearly 74 percent in interest and fees, the report found.

Anita Edward says she has borrowed money three times from LAPO for her hair salon, Amazing Collections, in Benin City, Nigeria. The money comes cheaper than other microloans, and commercial banks are virtually impossible, she said, but she resents the fact that LAPO demanded that she keep $100 of her roughly $666 10-month loan in a savings account while she paid interest on the full amount.

“That is not O.K. by me,” she said. “It is not fair. They should give you the full money.”

The loans from LAPO helped her expand from one shop to two, but when she started she thought she would have more money to put into the business.

“It has improved my life, but not changed it,” said Ms. Edward, 30.

Godwin Ehigiamusoe, LAPO’s founding executive director, defended his company’s high interest rates, saying they reflected the high cost of doing business in Nigeria. For example, he said, each of the company’s more than 200 branches needed its own generator and fuel to run it.

Until recently, Microplace, which is part of eBay, was promoting LAPO to individual investors, even though the Web site says the lenders it features have interest rates between 18 and 60 percent, considerably less than what LAPO customers typically pay.

As recently as February, Microplace also said that LAPO had a strong rating from Microrate, yet the rating agency had suspended LAPO the previous August, six months earlier. Microplace then removed the rating after The New York Times called to inquire why it was still being used and has since taken LAPO investments off the Web site.

At Kiva, which promises on its Web site that it “will not partner with an organization that charges exorbitant interest rates,” the interest rate and fees for LAPO was recently advertised as 57 percent, the average rate from 2007. After The Times called to inquire, Kiva changed it to 83 percent.

Premal Shah, Kiva’s president, said it was a question of outdated information rather than deception. “I would argue that the information is stale as opposed to misleading,” he said. “It could have been a tad better.”

While analysts characterize such microfinance Web sites as well-meaning, they question whether the sites sufficiently vetted the organizations they promoted.

Questions had already been raised about Kiva because the Web site once promised that loans would go to specific borrowers identified on the site, but later backtracked, clarifying that the money went to organizations rather than individuals.

Promotion aside, the overriding question facing the industry, analysts say, remains how much money investors should make from lending to poor people, mostly women, often at interest rates that are hidden.

“You can make money from the poorest people in the world — is that a bad thing, or is that just a business?” asked Mr. Waterfield of mftransparency.org. “At what point do we say we have gone too far?”

Note - Kiva is not robbing you here, they are just working with some folk that are.

Full article: http://www.nytimes.com/2010/04/14/wo...ewanted=3&_r=0

onthego15

Many of Kiva's field partners are non-profit organizations. Most are involved with social service, education, health care, development and other socially beneficial activities that banks and purely financial organizations are not involved in. That's one of the reasons that Kiva gives social performance badges for each field partner (and which can be found on every loan) so that we as lenders, can understand that our loans are going to organizations that provide a wide variety of services.

I seriously doubt that the Bank of America is deserving of any social performance badges.

If you or any Kiva lender is concerned about interest rates, both the kiva.org/lend page and kivalens.org provide easy way to screen loans according to interest rates and amount of profit the field partners are making. On Kiva.org/lend, scroll down the left column and then click on advanced options. Then you will be shown these ways to screen your loans. Of course, you can also check field partner's interest rates and profitability on any individual loan.

But if you really want to understand what it is like for these field partners to operate, then I strongly recommend that you read some of the stories from the field. I also used to be very concerned about high interest rates (my father had a mortgage lending business, so I have a lifelong history with this issue) until I read some of the stories. Since then I've been amazed that interest rates are so low compared to the difficulties these field partners must face.

A good place to read some of these stories:
http://fellowsblog.kiva.org/

A couple of years ago some Flyertalkers helped Lina Goldberg get to Cambodia for her stint as a Kiva fellow. Some of her stories are here:
http://linakiva.blogspot.com/

onthego15

A few more thoughts on "high' interest rates.

Please keep in mind that one of the reasons Kiva was founded and is continually growing is because of its dedication to providing loans to people who have little or no access to capital.

Many borrowers live in remote areas without phones, internet or good roads. Sometimes it can take field partner staff an entire day to visit one or two borrowers for assessment, due diligence, training etc. Is this cost effective? Of course not. But how else do you reach those who really need the loans?

What about field partners who are in war torn countries like Afghanistan, Iraq, Mali, Sierra Leone and others? Should they abandon their borrowers because it's not cost effective or safe to provide services and loans to them?

What about borrowers who have never been in business for themselves before? What if it takes weeks/months of training and education to properly prepare them to launch their business? Don't they deserve opportunities, too?

What if the field partner works in a country whose laws, culture, infrastructure etc. are not supportive of entrepreneurship?

What if the field partner has to provide many services which we in the developed world take for granted?

I could go on and on with examples. But the question remains should Kiva and Kiva field partners really try to reach those who are very difficult to reach or should they cut back and just provide loans to those who can safely and easily be reached (and thus keep interest rates low)?

And if a region or village is dominated by private lenders whose rates are 200-300% should Kiva's field partners not provide loans at 50%, just because we in the developed world can get loans at 5%?

And if these field partner's rates are so high (compared to what other lender's rates are), then why are the borrowers so happy to receive these loans?
And why are they paying them back more than 99% of the time?

I totally understand that Kiva is a flawed organization and so are all of its field partners. Mistakes are made all the time. But for me the real question is are Kiva and its field partners providing a real service for these borrowers?
And if these field partners did not exist, what are these borrowers alternatives? I don't like 50% interest rates. But they are a hell of a lot better than 200% interest rates.

brooklynmatt

I like 10% rates better than 50% rates.

I agree they are doing great work, but is someone getting too big a slice of the pie over there? That is the thing to keep an eye on.

Don't forget, all that stuff about their extra duties and educating in the field:

1. Does not apply to all borrowers - one guy I just lent to on Zidisha has an MBA and a business already, he knows what he wants and needs a capital injection. He doesn't need a 50% interest rate and a story about how much good work the field partners are doing, he needs liquidity in lending at a competitive rate.

2. We aren't assessing the waste in this, we are making an excuse for whatever high number they give us rather than drill down.

So, my take on it is lets give to Kiva, lets give to Zidisha, lets pressure and educate about any potential exploitation of our altruistic efforts and make sure that the people we care about (the borrowers) get a fair deal, not a 'this is the best your gonna get' deal.

In ways I feel bad about talking like this on here since I don't want to discourage people from giving, but it is clear that many folk don't know about this factor and it shouldn't be glossed over.

jada135

im thinking of signing up is the pay back rate really 99 percent?

onthego15

Yes, Kiva's repayment rate is 99%, and that number is slowly increasing. It was about 98.7% three years ago

KyRoamer

With over 1200 loans, I have had two partially repaid loans default. My default rate is just 0.16% meaning my payback has been 99.84%.

Kiva's delinquency rate is 2.48%. Mine is slightly higher but many of my loans are less than $1 behind. Usually delinquencies improve as the month nears the end and those a few days late get their dollars in.