Kiva Blog

Kiva works with existing microfinance institutions, which we call Field Partners, to fund loans to low income entrepreneurs all over the world. This is the first in a series of "Partner Profiles" that we'll be sharing here from time to time.

Field Partner: Caja Rural Señor de Luren

Location: Peru

Joined Kiva in: October 2009

Special circumstances: In August 2007, an 8.0-magnitude earthquake hit the city of Ica, where Caja Luren is located. Over two years later, Kiva Fellow Josh Wilcox explains that reconstruction has been patchy: it is commonplace to see a pile of rubble, a bustling restaurant, and a partially built house all in the same vicinity. In addition to the widespread lack of housing insurance, this is due in part to the misallocation of government grants for rebuilding. Even among those who received grants, many did not receive enough to finish the job, leaving the people of Ica needing “all the funds and help they can get,” according to Josh.

Kiva capital impact: With the help of funds from Kiva lenders, Caja Luren is providing lower-interest loans to borrowers who are still struggling to rebuild from the devastation of an earthquake that hit the city of Ica over two years ago. In October 2009, Caja Luren began providing lower interest loans to its Kiva borrowers, many of whom need loans to finish rebuilding their homes. As many of these borrowers’ homes are also their places of business, rebuilding their houses will bring the double benefit of providing livable housing and supporting their source of income.

Ingenuity in the face of adversity: As an example of the many ways people in Ica are working to overcome adversity, Josh tells the story of Delia Pasache Donayre, a mother of three whose husband lost his eyesight and is unable to work. Since their adobe home collapsed in the earthquake, she has engaged in a variety of businesses to sustain her family. She runs a convenience store in front of their partially rebuilt home, rents a car to a driver of a colectivo (a collective taxi with a fixed route and fare), and caters social events in the neighborhood.


Ongoing need for support: The 2007 earthquake has long since faded from the focus of international news, but the people of Ica are still dealing with its repercussions. The example of Ica illustrates the need for long-term support—in addition to initial relief—for reconstruction following a natural disaster. Haiti will likely have a similar need for support in the coming years as it rebuilds following the earthquake that struck there on January 12.

To make a loan to an entrepreneur from Caja Luren in Peru, click here.

I'm excited to announce a new Kiva Field Partner - Credicomun - our third active partner in Mexico. Credicomun posted its first (of many!) loans this morning here.

Credicomun is based out of Mexico City and has 17 branches throughout the country. The organization is less than 5 years old but has grown rapidly in that time. They work mostly in rural areas through the village banking methodology (group loans), and their average loan size is quite small for Mexico, at about $400. The organization has a strong focus on social performance, and they are currently rolling out a financial education program that will be offered to all their clients in conjunction with the loan. Particularly impressive is the strong focus throughout the organization (from loan officers to the board) on not over-indebting clients - a huge problem in Mexico.

One of the most interesting features of this organization is their focus on technology. The organization has one of the most developed technology departments I have ever seen. They are starting to roll out mobile devices to their loan officers so they can capture loan data instantaneously and track it in their system (they plan to track social data this way as well). They are always trying to find ways to make their work more efficient through technology.

Please join us in welcoming Credicomun to the Kiva community!

"Our lives begin to end the day we become silent about things that matter."
- Martin Luther King Jr.

We thought the Kiva lending community would like to see this update on Kiva's Field Partner in Haiti, Esperanza International written by Esperanza staff member Jordan Nelson.

Dear Kiva Lenders,

While it has been two weeks since a 7.1 earthquake struck Port au Prince, Haiti the destruction and loss of lives left as a result of the natural disaster is tremendous.

Kiva’s field partner in Haiti—Esperanza International has offices located in the northern part of Haiti, Trou du Nord (close to Cap Haitian), in which it is confirmed that the offices as well as all staff members were spared from harm. However, Esperanza has confirmed that two associates who were in the capital tragically lost their lives during the earthquake. In addition, 40% of Esperanza’s borrowers in the Dominican Republic are of Haitian origin and have been adversely impacted by the disaster. This link is particularly important as many of the Haitian clients in the Dominican Republic regularly send remittances to their relatives in Haiti, which will prove to be a vital lifeline to help sustain these families in the months ahead.

Clients in Haiti now more than ever face a whole new set of challenges: many associates have already and will continue to take in family members fleeing from Port-au-Prince; hundreds of borrowers cope with the emotional distress of losing family and friends; associates who once traveled frequently to the Capital as a commercial center must find news ways of obtaining necessary supplies and materials for their businesses; and many will be facing elevated prices as the supply of products is now limited and the demand is elevated, etc.

Esperanza has responded to the disaster situation at hand by working with already established partners in Port-au-Prince and southern Haiti in addition to various U.S. and Dominican organizations. It is currently in the early stages of an immediate disaster relief plan, which is targeting 10,000 families to send immediate relief to. In addition, Esperanza has collaborated with the U.S. organization, Operation Rainbow, performing around 100 surgeries to date in the border town of Jimaní as well as with surgeons from Rush Presbyterian Hospital of Chicago to treat victims in Carrefour, the epicenter of the earthquake. This immediate aid will be followed by a longer-term relief process, which will focus on 5,000 families (32, 250 individuals) to provide rehabilitation to in the form of family housing, education, water/preventative health, and income generation.

With regards to the earthquakes affects on Esperanza’s microfinance operations, it is likely that in the months ahead many of Esperanza’s loans in Haiti may need to be refinanced or cancelled as clients deal with the aforementioned challenges, however, we intend to stand by our clients and continue to offer access to credit, as well as our range of complimentary services, as the situation permits. Additionally, Esperanza intends to go ahead with its long term plan of opening three more branch offices in the next three years in Haiti to expand access to credit to Haitian borrowers.

Despite the many obstacles borrowers face in the months ahead, associates have continually proven capable of overcoming adversity and showing resiliency in difficult times. They have found innovative and creative ways to create new income streams and this ability will be essential to a sustainable rebuilding process in Haiti. More than ever, micro-finance has the potential to be a vital part of this re-growth.

If you would like to learn more about Esperanza and HOPE International, or to find out ways you can help, – including their current humanitarian relief and other support efforts in Haiti – please visit their website here.

To learn about other ways you can help now, check out the BBC's website here for more information on other well-vetted organizations that you may wish to support.

In a growing tradition of Kiva lenders doing some amazing things, this March, Jonathon Stalls and his dog, Kanoa, will embark on a coast-to-coast cross country trek covering an estimated 3,000 miles from Delaware to San Francisco, CA - and he’s taking Kiva with him.

 He will be walking through hundreds of towns, cities, and communities in Delaware, Maryland, West Virginia, Ohio, Indiana, Illinois, Missouri, Kansas, Colorado, Utah, Nevada, and California.



Why is Jonathon going on this cross country trek?



“Since living in Ireland (2005-2006), visiting Honduras in 2007, and swapping life stories with many ‘travelers,’ I have craved an adventure that would challenge my daily activities, expectations, and priorities. The speed and growth of our commodity driven and over-communicated culture feeds a personal call to engage in quieter, slower, and more intentional experiences with less. This walk will be a journey in listening, eating, sharing, and growing with: strangers, neighbors, officials, hikers, animals, wind, and dirt.”



Why is he supporting Kiva?



"I wanted and needed a larger purpose that would stretch far beyond my own personal attractions to such a trek. I came across Kiva in my social entrepreneurship class at Metropolitan State College of Denver in the fall of 2007. I craved to do more the minute I clicked on the link, browsed the website, and began lending. I am excited to spread Kiva’s mission and build lending communities across the country. I am more than enthusiastic to do my part in helping our nation’s leading incubators in the fight to alleviate extreme poverty across the world – GO KIVA!” 



If you wish to support Jonathon, learn more here about the various ways you can get involved, including, in his words:



Walk: "I strongly encourage everyone and anyone to take a day, a week, or more and find a way to meet me on the trail."



Host: "Connect with me at kivawalk@gmail.com if you or anyone you know can host Kanoa and me along the way."



Inspire: "Have me be the reason to host a party and let me speak about how I was inspired to help raise awareness about Kiva!"

Connect: "Put me in touch with someone you know at a University along the trail. I'd love to present to students and/or teachers who are interested in learning more about how Kiva inspired me to walk across the country!"


Kiva Walk website: "Visit my site to learn more about more ways to get involved!"



Also, Jonathon has partnered with Sports Basement in San Francisco! They will be hosting a fundraising party for Jonathan’s Kiva Walk on Wednesday, February 10th! Click here if you would like more information or are interested in attending. Jonathon would like to thank Kiva staff, the Sports Basement and all friends and family who are supporting this adventure. Check out Jonathon's website to stay updated on his trip!

**Disclaimer: Please note that the Kiva Walk website is operated and monitored by Jonathon Stalls, and is independent of, and not affiliated with, Kiva Microfunds (“Kiva”), including its website (Kiva.org). Kiva and “Kiva Walk” are two separate and non-affiliated entities, and any transactions an individual may decide to make through or for Kiva Walk, Sports Basement or otherwise for Jonathan’s trek—whether financial or non-financial—would be solely for the benefit of Kiva Walk and would not be for the benefit of the Kiva organization.

Kiva Fellows are short-term volunteers who work with a specific Kiva field partner for three months or more. They help to bridge the gap between Kiva lenders and our field partners throughout the world sending stories and data back to Kiva HQ and the lending community. Kiva Fellows possess travel experience, language skills, enthusiasm for Kiva, and a flexible personality – all of which allow them to conduct field work that strengthen connections between stakeholders in order to alleviate poverty.

Last week, Kiva hosted trainees for the tenth class of Kiva Fellows here at our headquarters in San Francisco. This class will be heading to 51 field partners in 31 countries. In the two years that the Kiva Felllows Program has existed, we have sent 254 fellows from 25 different countries to every country in which Kiva operates except for Iraq. Take a look at the map below for KF10.

(light green denotes fellows trained in KF9)

The Kiva Fellows Program is a vital and strategic asset to Kiva in fulfilling its mission. The fellows are an adaptable, scalable and sustainable resource to innovate at Kiva. Kiva Fellows have helped our field partners to utilize Kiva’s lending platform more effectively and efficiently to enable the organizations rapid growth and to get more funds from lenders to entrepreneurs.

We are still accepting applications for KF11 as well as future classes. We encourage you to apply. For more information and our online application please go to www.kiva.org/fellows

Valentine's Day is right around the corner! Looking for a unique gift? Consider purchasing Kiva Gift Certificates for your loved ones this year.

Starting at $25, Kiva gift certificates allow the recipient to make their own loans to entrepreneurs around the world and help alleviate poverty. Your recipient chooses the loans, receives repayments, and can choose to lend again and again!

Email your personalized gift certificate immediately or print it at home today. It is a special gift that keeps on giving!

When hearing about microfinance, people are usually amazed (at the concept) and appalled (at the perceived high interest and fees of the microfinance institutions – or MFIs). Indeed, interest and fees relative to portfolio average 31% (23% in real terms).

If microfinance is serving mostly poor and excluded people, shouldn’t MFIs subsidize the loans? Are they taking advantage of the poor?

A few facts:

• Most poor people don’t have access to financial services
• When they have access, it is often at exorbitant rates from money lenders
• They value lower interest rates less than one would think

That being said, most MFIs don’t charge high interest because they can. They charge high interest because they need to in order to cover their costs and stay in business. And, despite their seemingly high fees, they offer a cheaper alternative to existing sources of finance.

An MFI’s main costs are:

• Loan loss provision
• Financial costs
• Operating costs

A look at some numbers

Loan loss provision are low (2% of loan portfolio) due to low delinquencies. Financial and operating costs are higher, at 10% and 20% respectively. Donor grants and subsidized loans (from Kiva lenders and other social investors) allow MFIs to control their financial costs to some extent, but many MFIs are not allowed to mobilize a cheap source of funds, savings. For small, new MFIs, or MFIs that offer very small loans, operating costs average 28%, double that of MFIs that offer larger loans to small businesses. Small African MFIs that are not yet sustainable reach 52% average operating costs!

Size matters

It is much more expensive to administer 1,000 loans of $100 than one loan of $100,000. For a typical MFI reaching the poor, that would represent 1,000 client visits on a weekly or bi-weekly basis, travelling in areas that can take a day or more to reach. That MFI would also likely combine the loan with other services such as financial or health education. Compare this to the client getting a $100,000 by visiting the bank and showing its credit history…

The appropriate benchmark

Rather than judging MFI interest rates in a vacum, one needs to take a closer look at the services offered by the MFI, the clients it is reaching, and the areas where it works. Organizations like MIX and MF Transparency are working to compare interest rates and fees across MFIs that share similar characteristics. This type of analysis is much more meaningful when trying to determine whether an MFI is charging a “fair price” for its unique services than comparing microfinance interest rates to the traditional banking sector.

“Team Tia – Loan Around the Globe” is a Kiva lending team dedicated to Tia, a nine-year old girl living in Murcia, Spain. Tia has been diagnosed with several illnesses including dilated cardiomyopathy, Graves Basedow disease, pulmonary arterial hypertension, and congestive heart failure.


Tia is a strong girl with a passion for helping others and has enjoyed supporting Kiva entrepreneurs around the globe. Kiva lenders have been inspired by her story and last May, they created “Team Tia” to show their support for her by helping Kiva entrepreneurs. To date, “Team Tia” has 273 members and has made 1265 loans totaling $34,150.

The Kiva community thanks Tia for her dedication to help alleviate poverty throughout the world and we are sending our very best wishes her way!

A number of concerned Kiva lenders have written in following last week's news of torrential rains and flooding in the Cusco region of Peru, where Kiva field partner Asociación Arariwa is based. The region is currently experiencing the heaviest rainfall it has seen in the past 15 years. While most of the international news coverage has focused on tourists stranded near the Incan ruins of Machu Picchu, the effect on the local populations has been far more devastating.

Most houses in Cusco are built of clay and straw adobe bricks; many of these homes were destroyed or severely damaged when they were unable to withstand the heavy rains and flooding. A number of the communities surrounding the city of Cusco, like Lucre, Huacarpay, Oropesa and Anta were severely affected. Many residents lost their homes, animals, crops and/or possessions. The Peruvian government and local organizations have provided temporary tent shelters for homeless families. However, the rainy season will likely continue for another 1-2 months, delaying any reconstruction effort significantly. At present, most local discussion of the situation has centered on fulfilling immediate needs by providing emergency supplies rather than on mounting an effort to rebuild the homes that were destroyed.

It is not yet clear how many Arariwa borrowers have been affected by the heavy rains. A significant impact is expected, however, since most of Arariwa’s clients live in the Cusco region and many are residents of the communities that were hardest hit by the floods. One loan officer I spoke with estimated that of the clients he has been able to contact thus far, about 40% have seen their homes or their livelihoods significantly affected. Arariwa is currently organizing a relief effort to distribute basic emergency supplies like food, clothing and blankets to some of these communities. Some of the affected borrowers are Kiva clients; however, at this point it is too soon to know any precise numbers. We hope to start publishing journal updates detailing the flood’s impact on specific clients soon.

On a personal note, as a resident of Cusco I would like to say that I have been impressed and moved by locally organized relief efforts and the degree of solidarity being shown with flood victims. University students have launched door-knocking campaigns to collect emergency provisions and blankets and have traveled to hard-to-reach communities to deliver the supplies and help residents salvage their remaining possessions. Many Arariwa staff members are voluntarily giving a portion of their salary to support the relief effort. Nearly every plaza in the city of Cusco has been converted into the center of operations for a group collecting donations and funds to send to one of the affected communities.

We will continue to inform Kiva lenders of the situation on the ground as additional information becomes available. In the meantime, for more information or to find out how you can help, please contact Asociación Arariwa’s Kiva Coordinador, Raquel Villafuerte, at raquel.villafuerte@arariwa-microfinanzas.org.pe.

Kiva Lenders,

Today we are excited to announce the beginning of our partnership with BRAC Sri Lanka and the first loans to Sri Lankan entrepreneurs on Kiva! This is a partnership that will work a little differently than the rest of Kiva’s partnerships, due to the nature of banking regulations in Sri Lanka.

BRAC Sri Lanka launched operations in early 2005 following the tsunami that devastated coastlines across South and Southeast Asia. Initial activities focused on the provision of emergency relief for communities affected by the tsunami, including medical assistance for the injured, cleaning and disinfection of water wells, installation of latrines, and distribution of stipends and school materials for children. In May 2005, the institution launched its sustainable livelihood development program providing grants and loans for the re-establishment of sources of income that had been lost or severely damaged.

From its humble beginnings, BRAC Sri Lanka has grown to become the second largest NGO-microfinance institution in Sri Lanka serving 50,000 borrowers through a network of 55 branches spread across four districts. Over the next three years, the institution plans to expand its area of operation and expand its network to 100 branches and 150,000 borrowers.



In order to accept funds from Kiva lenders, BRAC Sri Lanka had to receive approval from the Central Bank of Sri Lanka. As part of their approval, the Central Bank of Sri Lanka set special conditions on funds from Kiva lenders:
- Kiva funding can only be used for borrowers below the Sri Lankan poverty line
- BRAC Sri Lanka should provide significantly reduced interest rates to borrowers receiving Kiva loans
- The Central Bank of Sri Lanka also required that Kiva funds must remain in Sri Lanka for no less than 12 months.

Even though the Central Bank of Sri Lanka requires that funds from Kiva lenders must stay in Sri Lanka for at least 12 months, we believe that we can accommodate timely repayments to Kiva lenders.

In order to minimize the number and expense of wire transfers across national borders, Kiva uses a billing system called “net billing.” This means that, for any given month, we subtract the amount of repayments that a Field Partner owes to Kiva lenders from the amount that a Field Partner fundraises for entrepreneurs on Kiva.

If the balance is positive, that means that the Field Partner has raised more money on Kiva than they need to repay, and we use those raised funds to credit your lender account with the repayments due to you.

With this system, Kiva can work with partners like BRAC Sri Lanka that disburse loans repaying monthly but where Kiva lender funds can’t flow back out of the country for a year. This is, of course, only possible when all goes right. There is the possibility that BRAC Sri Lanka has fewer than expected Kiva borrowers in one month and owes us funds. In a worst case scenario, it may take up to 12 months to get Kiva lender funds out of Sri Lanka.

We are piloting this new arrangement with BRAC Sri Lanka based on the organization’s strength and strong social mission, positive experience with other BRAC partners in Africa, and the unique opportunity to work in Sri Lanka (outside of this, we wouldn’t otherwise be able to work in Sri Lanka). We look forward to hearing from the lending community on this and hope you join us in welcoming BRAC Sri Lanka and its clients to Kiva!

Sincerely,
Ben Elberger, Regional Director for Anglophone Africa and South Asia
Stephanie Koczela, Field Support Specialist for Anglophone Africa and South Asia

We are thrilled to announce the Kiva debut of Cooperativa San José, our third active field partner in Ecuador. Cooperativa San José posted their first 15 loans this morning – unfortunately, their clients are so popular that I wasn’t able to finish this blog entry before every one was 100% funded! See the already-funded loans here, and check back soon for more loans.

San José is a savings and loan cooperative with a strong social focus that works primarily in rural areas of the Ecuadorian Andes. The 45-year-old cooperative operates primarily in hard-to-reach areas of Bolivar province, offering savings and loan products to many borrowers who would not otherwise have access to financial services. San José’s mission is “to offer high-quality financial services and products in order to fulfill the needs of our members and clients while contributing to progress and the wellbeing of Ecuadorian families.”

Please join us in giving a warm welcome to Cooperativa San José! We look forward to sharing their stories and supporting their borrowers. While waiting for more San José loans to be posted, you can read a blog entry from Kiva Fellow Josh Wilcox, currently on the ground in San José de Chimbo, Ecuador.

We'll be doing some maintenance work that will take Kiva.org offline tonight (1/28/2010) at 5 pm Pacific time for up to approximately 4 hours. Thanks for your patience during this time!

We're taking the Kiva website down for infrastructure maintenance this Thursday at 5pm PST. We expect the outage to be brief but may take up to four hours. Thanks for your patience!