Special Notice on SEED Development Group from Kiva Staff -- April 23, 2008

During an audit, Kiva discovered that the SEED Development Group was not providing entrepreneurs with the full amount of their loans raised on Kiva. This violates Kiva's policies, so we have terminated our relationship with SEED Development Group. In addition, SEED has defaulted on its entire loan portfolio, and all active loans have been defaulted. Please see the FAQs below for more information.


Q. What is SEED Development Group and how are they related to Kiva?

A. Kiva does not lend directly to any entrepreneurs. Instead, the loans on the Kiva website are administered by independent Lending Partners, which are organizations that lend to the poor for poverty alleviation. The role of a Lending Partner is to screen each entrepreneur, post his/her profile on the Kiva website, disburse the loan, and collect loan repayments. The SEED Development Group was formerly one of Kiva's Lending Partners in Kenya.

Q. What does it mean for a loan to default?

A. A loan is typically classified as ‘defaulted’ if has reached six months beyond its scheduled repayment date and has not been fully repaid. For example, if a loan is scheduled to be repaid in 12 months, and after 18 months the loan has not been fully repaid, it would generally be defaulted.

The SEED loans were defaulted earlier than the six-month default guideline as we have determined that further collection of these loans is not possible. In this case, the default was caused because SEED did not repay the loan, independent of if the loan was repaid by the entrepreneur.

Q. Did the entrepreneur that I loaned to receive any of his/her loan?

A. Possibly, but we can’t be sure. An audit confirmed that there were many cases where the loan amount posted to the Kiva website was different from the amount that the entrepreneur actually received. However, the audit did not provide reliable information on the status of each individual loan, so we can’t provide information on your specific loan. We can confirm, however, that SEED did provide some loans to the poor with Kiva funds, so it is possible that your entrepreneur did benefit from your loan.

Q. Why did I receive repayment notices if my loan was never disbursed?

A. Our partners are responsible for noting when loans are disbursed and when individual repayments occur. The disbursal and repayment information for your loan was based on the information that was provided to Kiva by SEED. While we work extremely hard to ensure that all of the information you see on the website is real and true, the information provided by SEED was not accurate. That means that in some cases SEED may have been noting repayments even if the loan was never disbursed.

Q. Was Kiva repaid by SEED?

A. In addition to providing false repayment information, SEED did not send any funds to Kiva for the repayments it noted on the website. However, Kiva management has made the decision to still honor the repayments that SEED had reported. For example, if a lender received notifications that $20 of their loan had been repaid, then Kiva will still provide the $20 in Kiva credit even though Kiva did not receive these funds from SEED. The balance of the loan for which no repayment notices were received is considered defaulted and no Kiva credit is being provided for this portion of the loan. This summer Kiva is implementing a new loan repayment reporting procedures with its Lending Partners to prevent this type of occurrence from happening in the future.

Q. Has Kiva pursued legal action against SEED?

A. Yes. Kiva has launched criminal and legal proceedings against SEED’s management. We take it very seriously when a partner violates our policies and abuses the trust of our lenders. When an unfortunate situation such as this arises, we commit to seeking justice and reconciliation through all legal options.

Q. What happened with SEED, and why has Kiva decided that the loans should be defaulted?

A. Kiva and SEED Development Group entered into partnership in January 2007. Following a period of low responsiveness from SEED’s Management, Kiva sent a qualified Fellow to SEED in the summer of 2007 to investigate and monitor loan handling and repayment. Upon discovering that entrepreneurs were not receiving the full amount of the loans raised on Kiva, we immediately halted new loans to SEED. Kiva then followed up with an audit, which confirmed these discrepancies.

After confirming the presence of discrepancies, Kiva undertook a swift course of action. We began by retaining the services of a Kenyan law firm to establish a legal case against SEED. Our efforts, in conjunction with SEED’s clients, led to the apprehension of SEED’s Executive Director by the Kenyan authorities. Despite what our lawyers felt was compelling evidence that Kiva funds had been stolen and a crime had been committed, the Kenyan criminal justice system did not bring formal charges against the Executive Director of SEED, and he was released. We followed up with several political inquiries, including an appeal to the Police Commissioner and the Attorney General in Kenya, and to date we have not been able to move the case forward. This led to the conclusion that it is highly unlikely that any funds will be recovered, and SEED loans should be defaulted. Despite significant difficulties, we continue to explore legal options to bring this case to justice, and will inform lenders in the event that funds are recovered.

Q. What is Kiva doing to prevent fraud from occurring in the future?

A. At Kiva we’re constantly improving our risk and due diligence procedures. An incredible amount of work goes into ensuring that each entrepreneur gets the loan capital that you provide, and that you can trust the information on Kiva’s website. Please check out our Risk and Due Diligence Center for more details on how we screen, rate, and monitor each Lending Partner.

Please realize that our audit of SEED uncovered a true exception to the norm; the vast majority of our Lending Partners administer your loans with the highest integrity. Kiva will continue to audit Lending Partners to monitor the integrity of your loan and to make our website a model for transparency in international development.

Q. Why did it take Kiva several months to provide an update?

A. During Kiva’s investigation of the situation and subsequent launch of legal proceedings, we were unable to communicate any details of the situation to lenders. In addition, we delayed communication as we were attempting to determine if any additional funds could be collected from SEED. For these delays, we ask the lender community for your understanding – we’re working as hard as possible to create a transparent website with accurate information that you can trust.


Original Partner Description provided by SEED

SEED Development Group is a unique microfinance organization that employs practical microfinance and microenterprise approaches to comprehensively address the needs of rural people. SEED is in the process of scaling up its operations from a community-based organization to a comprehensive one-stop microfinance services organization.

SEED has developed a methodological approach that has demonstrated an ability to provide financial services to poor people on a sustainable and profitable basis. The organization has proven its potential to help the poor reduce their vulnerability, improve their livelihoods, pay for basic health care and finance their children’s education.

SEED projects combine microfinance with aspects of microenterprises to enable clients to achieve 70% growth within the first 12 months of membership. The project promotes affordable and accessible savings and credit products. In particular, SEED offers a Micro-Asset Finance loan product that provides credit for dairy goats, beehives, and indigenous poultry. SEED has moved beyond “credit for enterprise” to encompass “financial services to reduce vulnerability and improve livelihoods” in line with the Millennium Development Goals.

SEED has 14 centres in Siaya, Busia, Nyando and Kisumu District spread across Kenya\'s Western region.

To increase household incomes and enhance the lives and livelihoods of poor communities in the Western Region of Kenya through the provision of financial services.


  • SEED micro-finance now has over 3,000 registered members accessing affordable financial services.
  • 1,225 members have received loans to date. These loans have been used for a diverse range of activities including improving home farms, starting and expanding microenterprises, building latrines in family compounds to improve health and sanitation, and paying high school fees.
  • Many members who received loans now have increased food security or increased income as a direct result of the loans provided.
  • Tekmology, a local partner, works with SEED to assist microenterprises in identifying ready markets for honey, local poultry, building shelter, peanuts and sweet potatoes.


Repayment Performance on Kiva

    This Lending Partner All Kiva Partners
  Start Date On Kiva Jan 31, 2007 Oct 12, 2005
Total Loans $74,550 $1,958,818,855
Amount of raised Inactive loans $0 $250,565
Number of raised Inactive loans 0 237
Amount of Paying Back Loans $0 $161,326,725
Number of Paying Back Loans 0 188,875
Amount of Ended Loans $74,550 $1,768,237,830
Number of Ended Loans 262 2,370,066
Delinquency Rate 0.00% 12.18%
Amount in Arrears $0 $12,199,756
Outstanding Portfolio $0 $100,189,739
Number of Loans Delinquent 0 72,764
Default Rate 18.73% 1.83%
Amount of Ended Loans Defaulted $13,965 $32,304,134
Number of Ended Loans Defaulted 184 84,789
Currency Exchange Loss Rate 0.00% 0.50%
Amount of Currency Exchange Loss $0 $11,980,628
Refund Rate 0.00% 0.54%
Amount of Refunded Loans $0 $10,526,300
Number of Refunded Loans 0 9,596

Loan Characteristics On Kiva

    This Lending Partner All Kiva Partners
  Loans to Women Borrowers 42.56% 78.23%
Average Loan Size $285 $392
Average Individual Loan Size $285 $589
Average Group Loan Size $0 $1,891
Average number of borrowers per group 0 8.3
Average GDP per capita (PPP) in local country $1,800 $5,599
Average Loan Size / GDP per capita (PPP) 15.81% 7.00%
Average Time to Fund a Loan 0.59 days 8.93 days
Average Dollars Raised Per Day Per Loan $482.68 $43.86
  Average Loan Term 6.69 months 11.47 months

Journaling Performance on Kiva

    This Lending Partner All Kiva Partners
  Total Journals 390 1,178,627
  Journaling Rate 98.09% 42.26%
  Average Number of Comments Per Journal 0.51 0.02
  Average Number of Recommendations Per Journal 2.03 0.57

Borrowing Cost Comparison (based on 2009 data)

    This Lending Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower N/A 36.00% PY 27.02% PY
  Profitability (return on assets) N/A 0.5% -3.10%
  Average Loan Size (% of per capita income) N/A 56.00% 0.00%

Country Fast Facts

Lending Partner Staff