April 3rd, 2012

ADEPHCA's final loans with Kiva have ended, and Kiva's partnership with ADEPHCA is now closed. For the last 8 months, Kiva has been working with ADEPHCA to try to recover the remaining outstanding loans due to Kiva lenders. Kiva and ADEPHCA agreed upon a payment plan in August 2011, but despite Kiva's attempts to collect funds from ADEPHCA, Kiva only received $984 of a total of $27,056 outstanding at the time of our last update. The funds that ADEPHCA sent Kiva were paid out to lenders on a pro-rata basis. The remaining $26,072 has been defaulted due to an inability to recover repayments despite efforts to collect.


If Kiva is able to recover any additional funds from ADEPHCA, they will be applied to lenders' accounts on a pro-rata basis. 



July 30, 2011
 
ADEPHCA has been a partner of Kiva's for forty-four months, successfully paying back $126,775 in loans since the partnership began in October of 2007.
 
ADEPHCA currently has $2,646 in loans on Kiva currently in arrears, out of the total outstanding portfolio of $27,056. As a result, its delinquency rate as expressed on the Kiva website is currently 9.78%. 
 
In July 2010, Kiva posted a loan alert on ADEPHCA's loans, warning lenders about the potential risks of lending to ADEPHCA's borrowers: 
Please note that Kiva considers loans from this Field Partner, ADEPHCA, to be particularly high risk.
 
This organization is very small and started working with Kiva before certain core risk and due diligence policies were put into place. ADEPHCA organization would not fit under Kiva’s current partnerships criteria because they do not have any audited financial statements, they do not have established internal controls, and they currently have no other sources of funding than Kiva.
 
Kiva continues to allow ADEPHCA to raise funds on the website for two reasons. First, if Kiva were to abruptly end the partnership we believe there would be a higher risk of loss for lenders, since cutting off the Kiva funding source would put ADEPHCA in a financially distressed position. In addition, since ADEPHCA provides loans in some of the poorest and most remote areas of Nicaragua where there are almost no other options for funding, we believe these loans could still be of interest to lenders even considering the increased risk. 
Since then, the situation at ADEPHCA has not improved. Kiva has recently discovered that in the last few months, due to a lack of cash flow, ADEPHCA has not been disbursing the loan amounts they've fundraised on Kiva to their clients.  This is a violation of Kiva's policies and we have paused ADEPHCA from fundraising on Kiva following this discovery.
 
Once we became aware of the issue, Kiva turned off the settlements procedure while we investigated.  This was done as a precaution in the event we needed to refund loans to lenders who had lent new funds after Kiva became aware of the irregularities, but had yet to decide on the future of the relationship.
 
Now that this violation of Kiva's policies has been confirmed, Kiva is refunding $1,400 in loans fundraised after settlements were turned off.  In the month of July, ADEPHCA had raised funds on Kiva for five separate loans (two loans were fully funded, while three were partially funded).  As a result of the refunds, four of these loans will see the complete return of their capital.
 
Kiva will continue to work diligently towards recovering the remaining outstanding lender funds.  In the event that Kiva is able to recover any lender funds, they will paid out to Kiva lender accounts on a pro-rated basis, based on the percentage of total loans outstanding for each month.
 
We will continue to update this page as we have more information

Update from Kiva Staff on July 7, 2011:

In recent years, the "No Pago" movement (a movement for non-repayment of loans) has created concern around the increased risk of loan non-repayment by Kiva borrowers in Nicaragua. As a result, last year Kiva posted a loan alert on Nicaraguan loans, warning lenders about the potential risks of lending to entrepreneurs in Nicaragua. Earlier this month though, the government passed a new microfinance law that has addressed many of these concerns. As a result, the situation appears to have resolved itself and the "No Pago" loan alert is being removed.

We will update this page if there is any additional information available.

Update from Kiva Staff on July 19, 2010:

In order to help you better understand the potential risks of lending to entrepreneurs in Nicaragua, Kiva continues to provide information on the “No Pago” movement (a movement for non-repayment of loans).


The momentum behind the No Pago movement appears to have largely dissipated, as a result of the National Assembly's passage of a law in April 2010. This new law allows delinquent borrowers (as of June 2009) to re-negotiate loans with more favorable interest and terms. Borrowers who were part of the No Pago movement were required to approach MFIs to re-negotiate their loans by May 12th of this year. While many borrowers did approach MFIs to re-negotiate their loans, it still only accounted for a small percentage of the members of the No Pago movement.

For Kiva lenders who previously lent to Nicaraguan borrowers: 

  • if your loan had default coverage, then even if your loan was affected, the MFI will cover your loan for the full amount.
  • if your loan did not have default coverage by the MFI: If the borrower you lent to did not approach their MFI before May 12th, their loan cannot be re-negotiated under the terms of the No Pago movement resolution. Kiva is working closely with its Field Partners in Nicaragua to see if any Kiva clients have re-negotiated their loan under this law and will message to lenders accordingly.

For Kiva lenders considering making new loans in Nicaragua: it seems that as a result of the passage of this law and since the term for re-negotiation has passed, the microfinance situation is calmer in Nicaragua that previously. Kiva will continue to update the Kiva lender community if the situation changes significantly.

Status update on ADEPHCA from Kiva Staff on March 22, 2010:

Please note that Kiva considers ADEPHCA to be an especially high risk partner organization. This organization is very small and started working with Kiva before certain core risk and due diligence policies were put into place. As a result, ADEPHCA would normally not fit under Kiva’s partnerships criteria today because they do not have any audited financial statements, they do not have effective internal controls, and they currently have no other sources of funding than Kiva. Kiva continues to allow ADEPHCA to raise funds on the website with the clear and full disclosure that these are very high risk loans, in part because ADEPHCA provides loans in some of the poorest and most remote areas of Nicaragua where there are almost no other options for funding, and we believe these loans could still be of interest to some lenders even after considering the increased risk. 

Status update on ADEPHCA from Kiva Staff on January 11, 2010:

As mentioned in previous updates, last year Kiva became aware of weaknesses in ADEPHCA that caused a reduction in their star rating and fundraising limit. Kiva Staff has been working to understand more fully ADEPHCA’s current financial situation. While we do not have any new information to share, we hope to be able to give a fuller update to lenders next month, after a Kiva staff visit to ADEPHCA. We appreciate your patience.

Status update on ADEPHCA from Kiva Staff on October 14, 2009:

Kiva Staff is aware of the high delinquency rate for ADEPHCA. We are working with the organization to understand the situation more fully and decide next steps. We will be providing a fuller update in the coming weeks. We appreciate your patience.

Status update on ADEPHCA from Kiva Staff on April 16, 2009:

During routine partner monitoring at ADEPHCA, Kiva became aware of certain weaknesses including difficulty in accessing other sources of funding. This has caused us to reduce ADEPHCA's star rating from 3 to 1. In the coming months, Kiva will continue to work closely with ADEPHCA and provide additional updates as appropriate.

About ADEPHCA

The Association of the Atlantic Cost for Human Advancement and Development (ADEPHCA by its Spanish acronym) is a small nonprofit, nongovernmental organization located on the Caribbean Coast of Nicaragua that works in and with communities of Indigenous and Mestizo peoples and people of African descent (“Afro-descendents”). ADEPHCA was founded in 1987 by leaders from the coastal region to promote the ancestral and historic autonomy of the coastal communities. Within these communities, ADEPHCA has promoted community development projects as varied as infrastructure, housing, forestry, and the environment. Their microcredit program began in 1999 with a grant from the Japan International Cooperation Agency (JICA) and technical assistance provided by JICA and the U.S. Peace Corps.

ADEPHCA provides microcredit loans to entrepreneurs with established small businesses that can benefit from a small influx of capital to improve and/or expand their businesses. The principal strategic objective of the microfinance program is to promote the integral development and strengthening of small and micro-businesses in the towns and communities of indigenous, afro-decedents and coastal mestizos, which in turn contribute to the reduction of poverty and increase the standard of living of Nicaragua’s Caribbean Coast. ADEPHCA is the only organization in the region that currently lends to the most marginalized poor: those that cannot access credit through the commercial banking system or even the larger microfinance institutions. Through their partnership with Kiva, ADEPHCA is able to offer loans at half the interest rate they charge for other loan products.


Kiva HelpRepayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Oct 30, 2007 Oct 12, 2005
Total Loans $169,875 $537,835,100
Amount of Raised Inactive Loans $0 $320,475
Number Of Raised Inactive Loans 0 249
Amount of Paying Back Loans $0 $109,850,425
Number Of Paying Back Loans 0 113,387
Amount of Ended Loans $169,875 $427,664,200
Number Of Ended Loans 295 549,502
Delinquency Rate 0.00% 3.39%
Amount In Arrears $0 $2,403,768
Outstanding Portfolio $0 $70,950,902
Number of Loans Delinquent 0 10,653
Default Rate 24.80% 1.01%
Amount of Ended Loans Defaulted $42,122 $4,334,868
Amount of Ended Loans $169,875 $427,664,200
Number Of Ended Loans Defaulted 108 14,050
Currency Exchange Loss Rate 0.00% 0.06%
Amount of Currency Exchange Loss $0 $298,028
Refund Rate 2.35% 0.82%
Amount of Refunded Loans $4,000 $4,417,000
Number Of Refunded Loans 5 4,864

Kiva HelpLoan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans To Women Entrepreneurs 73.33% 74.09%
Average Loan Size $545 $417
Average Individual Loan Size $579 $656
Average Group Loan Size $675 $1,812
Average Number Of Entrepreneurs Per Group 10.5 8
Average GDP Per Capita (PPP) in Local Country $3,636 $3,463
Average Loan Size / GDP Per Capita (PPP) 14.99% 12.05%
Average Time To Fund A Loan 4.17 days 5.28 days
Average Dollars Raised Per Day Per Loan $130.77 $78.99
  Average Loan Term 11.09 months 10.05 months

Kiva HelpJournaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 63 268,526
  Journaling Rate 20.68% 42.10%
  Average Number Of Comments Per Journal 0.22 0.09
  Average Number Of Recommendations Per Journal 8.56 2.06

Kiva HelpBorrowing Cost Comparison (based on 2009 data)

    This Field Partner Median for MFI Peers in Country All Kiva Partners
  Portfolio Yield N/A N/A 34.93%
  Profitability (Return on Assets) N/A N/A -1.11%
  Average Loan Size (% of Per Capita Income) N/A 52.20% 42.70%

Kiva HelpCountry Fast Facts

Field Partner Staff

Paula Calero
Wifredo Machado Boudier
Guillermo Perez Montalvan