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Partner Description:

In a region severely lacking in commercial banks and banking regulations, Kaaba Microfinance Institution (K-MFI) is playing a crucial role in providing underserved communities in Somaliland with vital access to capital.

Since Somaliland declared independence from Somalia in 1991, its status as a self-declared sovereign state has deeply hindered the economy, creating an informal system that relies heavily on remittances. K-MFI aims to provide financial services to those who are financially excluded from the current system. In particular, K-MFI seeks to enable low-income and poor entrepreneurs in Somaliland (with a focus on women) to become self-reliant and serve as agents of change in their respective communities.

K-MFI was initiated as a small microfinance project by the Doses of Hope Foundation in 1998 and was later established as an independent microfinance institution in 2009. Doses of Hope (DOH) is a non-governmental development foundation that was set up in the late 1990s by Fadumo Alin, then a political refugee in the Netherlands who had fled Somaliland during the civil war. By saving a portion of the support payments that she received as a refugee, Alin was able to start the organization.

DOH’s microfinance project, K-MF has become the main channel for supporting the surrounding communities. What began as a small micro-credit project with 150 clients in 1999, has grown into a microfinance institution with about 5,000 clients at the beginning of 2013.

Currently, the MFI offers three Islamic loan products in the form either of assets sold to clients at a markup, or -- on rarer occasions -- profit-sharing investments in small and medium enterprises:

Murabaha: to finance working capital or investments for micro-businesses.

Musharaha: a profit-sharing quasi-equity loan for more-established businesses.

Ijarah: a lease-purchase loan product to fund machinery required by registered producer cooperatives.

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A unique lending approach:

With Kiva funding, K-MFI is proposing to create a new youth-targeted Murabaha laptop loan. This new product aims to provide students and recent graduates with laptops on credit, helping them to further their education or build successful businesses.

According to K-MFI staff, education providers have identified the lack of access to computers as limiting for high-potential students and graduates. Due to the country’s unique situation, consumer goods like computers are not readily available even for those who would have the means to purchase these items. The new Murabaha laptop loan will consist of a laptop purchased by K-MFI and resold to the client at a markup of 1.33% to 8%, depending on the loan term requested by the client, with repayments over a period of up to six months.

Since its inception, K-MFI has not received any debt funding. Numerous organizations, including Rabobank Foundation, Oxfam Novib, United Nations Development Program, UNHCR and USAID have provided grant funding to K-MFI. However, most of these donors have placed significant restrictions on funds that have prevented the institution from building savings and providing products on credit. In this way, Kiva’s risk-tolerant capital is the only option for funding the Murabaha laptop loan.

Repayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Oct 22, 2013 Oct 12, 2005
Total Loans $118,375 $604,062,050
Amount of raised Inactive loans $55,000 $524,650
Number of raised Inactive loans 14 440
Amount of Paying Back Loans $0 $119,195,225
Number of Paying Back Loans 0 128,510
Amount of Ended Loans $63,375 $484,342,175
Number of Ended Loans 127 612,364
Delinquency Rate 0.00% 4.13%
Amount in Arrears $0 $3,197,480
Outstanding Portfolio $0 $77,511,205
Number of loanDelinquent 0 13,871
Default Rate 0.00% 1.11%
Amount of Ended Loans Defaulted $0 $5,357,808
Amount of Ended Loans $63,375 $484,342,175
Number of Ended Loans Defaulted 0 16,820
Currency Exchange Loss Rate 0.00% 0.09%
Amount of Currency Exchange Loss $0 $572,886
Refund Rate 0.00% 0.75%
Amount of Refunded Loans $0 $4,553,925
Number of Refunded Loans 0 5,085

Loan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans to Women Borrowers 24.82% 74.22%
Average Loan Size $538 $419
Average Individual Loan Size $522 $656
Average Group Loan Size $4,591 $1,830
Average number of borrowers per group 8.2 8
Average GDP per capita (PPP) in local country $600 $3,423
Average Loan Size / GDP per capita (PPP) 89.68% 12.23%
Average Time to Fund a Loan 0.7 days 5.69 days
Average Dollars Raised Per Day Per Loan $766.98 $73.54
  Average Loan Term 6.09 months 10.4 months

Journaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 0 301,704
  Journaling Rate 0.00% 42.39%
  Average Number of Comments Per Journal 0.00 0.08
  Average Number of Recommendations Per Journal 0.00 1.84

Borrowing Cost Comparison (based on 2012 data)

    This Field Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 52% PY N/A 33.16% PY
  Profitability (return on assets) 18.8% N/A -1.43%
  Average Loan Size (% of per capita income) N/A N/A 40.41%

Country Fast Facts

Field Partner Staff

Yacquub Abdilahi
Fadumo Alin
Mahamoud Muhumed
Rashid Sulub
Omer Yusuf