To respond to Karen Phillips earlier post about the questions raised by a recent New York Times Article on Kiva.org, I have a few quick points. First, Kiva has held transparency as a core belief since its inception. For instance, the information regarding Kiva’s MFI partners has been accessible on every borrowers profile including background information on the MFI and key statistics. Some lenders even search for borrowers based on the MFI the money goes though because they feel a connection or trust in that particular MFI. Also, since this latest “Kiva Controversy”, Kiva has reworked their webpage to make it even more transparent. I encourage readers to watch the video by a Kiva Fellow, Kieran Ball now posted on Kiva’s How It Works Page and to read Co-Founder and CEO Matt Flannery’s response to the article. For information about how Kiva’s model works on the ground, the Kiva Fellows Blog is a wonderful resource.
I disagree that the “person-to-person” connection is gone. And I doubt that this will discourage the thousands of active and inspired Kiva lenders. I don’t think that this controversy will effect people’s desire to connect to borrowers and lend a helping hand to them, and the Microfinance Institution that serves them. At least I hope not. While the article is correct to push Kiva towards even greater transparency, I am saddened by the fact that the NY Times Article may mislead readers into thinking that the borrowers don’t get the money.
The loans that Kiva provides allows their MFI Partners to reach people that in many cases they wouldn’t be able to without Kiva funds. Though it may take a more circuitous route than many borrowers assumed despite the information on Kiva’s website, the borrowers get the money. I have seen first hand the effects of Kiva loans, the Kiva loan disbursement process, the loan application process and the way that loans are repayed. MFIs see Kiva’s funding as crucial to the success of their borrowers and while they often disburse the loan before it is funded, without the effective “repayment” by Kiva, they couldn’t have made that loan. 100% of each loan goes to the borrower who are touched when they learn that an individual on the other side of the world has lent to them. I am touched when I receive news from other Kiva Fellows, or from the MFIs themselves about the people I have lent to.
I’m surprised that it comes as a shock to many that the money lenders send to their chosen borrower is administered through an MFI. Of course the borrowers in rural Mexico, or slums of Kampala don’t have paypal accounts! And I’m surprised that it comes as a shock that many MFI’s disburse the money before the loan is fully funded on the Kiva website. One of the main needs of microborrowers is flexible products and fast loan processes. If each borrower had to wait a month for their loan to both fund on the Kiva website, and for Kiva to wire that money (there is a cost to wiring money, so it isn’t done for every twenty-five dollar transaction but rather in a monthly lump sum) then one of the main purposes of the loan- patching in times of low cash flow, or jumping on a business opportunity, would be lost. And in cases where the borrower could be serviced by multiple MFIs, the MFI that Kiva partners with may lose their competitive advantage as borrowers seek faster loans from a competitor.
Despite my wholehearted defense of Kiva, I think its wonderful that the article draws attention to the complexity of micro-finance and key transparency issues that Kiva could address.
By Sierra Visher
Working as a Kiva Fellow in Honduras and Bolivia led to many adventures for me over the past year. Before I left, I knew I´d be exposed to the surprising ins and outs of microfinance (Kiva uses the internet to connect lenders and borrowers across the world, I would be facilitating that interaction). I did not, however expect the experience to lead down so many unique roads.
I´m travelling now in Northern Peru, post Kiva Fellowship, and on my long bus rides and often quiet nights I´ve been remembering some of the moments. Most of the time, I was face to face with the dynamic, colorful and crushing poverty of two nations as alike in their optimism as they were different in their culture. I´ll forever be moved by images of children with severe iron deficiencies holding the hem of mom´s skirt who used her micro loan to sell jello to school children for less than 3 pennies a cup in a desperate effort to squeak out a living in her home clinging to Tegucigalpan hillsides. Still other moments make me laugh. One in particular caught me off guard on a taxi ride this morning, winding up a dirt road above lost hot springs in a tiny ¨town¨ called Llanguat.
I was riding with my roommate from Coroico to La Paz in the back of a minibus, jaw dropped at the Lord of the Rings- like scenery, when suddenly a cool sensation spreads under my knee. Looking down I realized that in our rapid altitude climb, the wine bottle of honey held by my neighbor had spontaneously exploded! Honey sticking, spreading and oozing across the seats covered my lap, stuck to my fingers and quickly to my hair, the wall, my shoes everything. Everyone starts passing back pathetic little scraps of tissue we tried to use to scoop up several liters of honey. Though my drinking water is always of very high value, I handed over my aligner, here use this. To my surprise, it turns out she was completely unconcerned with the mess is trying to salvage as much honey as possible!! Quickly she dumps the water out the window and starts pouring the remaining honey into my bottle. Thanks so much for this gift she tells me. I didn´t quite get it that she thought I had given her the bottle and thought I´d leave the matter until we arrived back in La Paz.
We get there and I´m trying to tell her, please I need my bottle back, what can we do? I´m thinking, buy another little bottle but she thinks, oh I´ll just buy this one. I cringe when I tell her it is 89 Bolivianos or 12 dollars. A sum she simply cannot fathom for a simple water bottle. I suddenly realize that I´ve come from very far away. Hopefully the honey can stick us together.
This was written by Sierra Visher
More articles about her fellowship can be found at www.svisher.wordpress.com