Discussion of Inadequate business descriptions, and other questionable loans

[Guest]

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[Dottie b]

I would also like to hear how the borrowers plan to repay the loans. They're doing it, so I assume it's from the household "income streams," which may be multiple. Some refer to "jobs," so I assume they work for other people. (Lots of U.S. factories have located on the Mexican side of the border. Guess why?)

At first I was disconcerted by these loans, and they're certainly not very "interesting." But the more I thought about it, the more I sympathize. These are border towns, and I understand that crime is very high, particularly from drug gangs. Housing is dreadful. Yet these folks have chosen to remain in their town and invest in their homes, rather than emigrate. They are building their homes one room at a time, through microfinancing, which is probably all that is available to them. We're not talking new kitchen counters here, we're talking roofs! I can't begrudge them that.

Yes, maybe Kiva should include these construction loans in its mission statement. But, really, so what? Obviously, they believe the loans are consistent with their overall purpose. And we're choosing what to fund - it's not like they're doing it without the lender's okay!

The write-ups should indeed be better, and it would probably save Kiva a lot of grief if they broadened their mission statement, but I don't see anything wrong with offering this lending opportunity. And if people want to fund them, why should others want to stop us?

(On the other hand, I don't think Kiva should list loans for dogs for food. I guess we all have our limits!)

Dottie B

[Kay]

Good for you, Dottie!

[Steff]

I hadn't thought of it in quite that way Dottie.  Thanks for a good explanation as to why the loans are offered.  Maybe you should volunteer to do the write-ups for the Mexican home loans.
Steff

[AccountAbility]

....Yes, maybe Kiva should include these construction loans in its mission statement. But, really, so what? Obviously, they believe the loans are consistent with their overall purpose....
Dottie B

It's not at all obvious that they believe these loans are consistent with their purpose, particularly when you see what the top dogs are continually saying.  They repeatedly emphasize that the loans are to entrepreneurs, to fund businesses as a way out of poverty. 

While micro-credit has many facets, including the fact that the poor often have no access to credit, nevertheless the aspect that Kiva keeps focusing on and all of its verbiage emphasizes is that loans to entrepreneurs increase productive incomes, which are vital for economic development to flourish in poverty stricken areas.  Jobs are virtually non-existent to this portion of the population so peddling or some other simple entrepreneurship is necessary for survival, let alone for "getting ahead".

Under this banner that Kiva has developed, any other purpose that slips in by slight of hand or misleading categorization should be questioned.  To say that the business is "construction" (or "cement" as one current offering suggests) is disingenuous at best.  So while these may be very valid needs, the label "inappropriate" applies in the Kiva context, particularly as so labeled.

Dan

[Dottie b]

It's not at all obvious that they believe these loans are consistent with their purpose, particularly when you see what the top dogs are continually saying.  They repeatedly emphasize that the loans are to entrepreneurs, to fund businesses as a way out of poverty. 

While micro-credit has many facets, including the fact that the poor often have no access to credit, nevertheless the aspect that Kiva keeps focusing on and all of its verbiage emphasizes is that loans to entrepreneurs increase productive incomes, which are vital for economic development to flourish in poverty stricken areas.  Jobs are virtually non-existent to this portion of the population so peddling or some other simple entrepreneurship is necessary for survival, let alone for "getting ahead".

Under this banner that Kiva has developed, any other purpose that slips in by slight of hand or misleading categorization should be questioned.  To say that the business is "construction" (or "cement" as one current offering suggests) is disingenuous at best.  So while these may be very valid needs, the label "inappropriate" applies in the Kiva context, particularly as so labeled.

Dan

Kiva obviously considers the loans consistent with their overall purpose by virtue of the fact that they offer them. <g>

I agree they don't seem consistent with the stated purpose. Two solutions to that - drop the loans or restate the purpose. I hold that actions are stronger than words - they're listing the loans, so re-state the purpose. And, lest we forget, THEY are the ones who gete to decide what is appropriate!

I also agree that the write-ups can seem misleading, especially when we're used to things being a certain way - loans for businesses, "construction" meaning providing building services, etc. But these are not the only loans that get tagged with phrases I find misleading. Fuzzy translations? Fuzzy thinking?

In a perfect world, Kiva would have an editor-in-chief who reviews all the write-ups, asks questions of the borrowers and MFI's, and edits or re-writes them for completeness and consistency. And does it instantaneously! I don't think that's going to happen. Maybe in a bureaucracy, but Kiva isn't that. It's a "messy" network of tiny, local operations around the world, with different cultures and different languages and differing education levels. They don't all think the same way and they don't speak the same way. We're just going to have to stretch our minds and realize that "construction" means something different to someone else. I doubt it took anyone too long to figure out what they really meant. Or am I expecting too much of the reader?

Yeah, the wording could be better. But since I don't believe the intention was to mislead, I don't think it's a big deal.

[Jundee]

The bottom line is that we can all decide ourselves to whom we're going to lend.

If you have any misgivings about the description of the need or the stated purpose you can always look somewhere else.

Nobody is obliged to place a loan to anybody they don't feel comfortable with.

[cpbailey]

OK, this is ironic.  Here is a loan from Mexico which is only in Spanish.

http://www.kiva.org/app.php?page=businesses&action=about&id=18361

It was placed long after the many home loans, yet it is funding much faster! 

http://www.kiva.org/app.php?page=businesses&action=about&id=18470
http://www.kiva.org/app.php?page=businesses&action=about&id=18471
http://www.kiva.org/app.php?page=businesses&action=about&id=18598
http://www.kiva.org/app.php?page=businesses&action=about&id=18605

and even businesses by the same partner as the home loans

http://www.kiva.org/app.php?page=businesses&action=about&id=18604
http://www.kiva.org/app.php?page=businesses&action=about&id=18602

So people really do fund what they want.  Or maybe there are a lot of fluent Spanish readers out there...

Colette

[Peter S]

 Or maybe there are a lot of fluent Spanish readers out there...

Colette

upwards of 32 million in the USA...    which is at least 4 million more than the population of Spain...

I can cope just about with reading Spanish.  Let's hope this doesn't spread - I couldn't cope with Vietnamese 

[simba]

In my opinion it is dishonest and disingenuous on Kiva's part to have home loans. Many would argue that they are not consistent with the advertised mission - it is called bait and switch.

Second, let us see from other MFIs eyes.  Many of them do a fantastic job in describing the business, the purpose of the loan and past credit history of the borrower.  If they see loans funded with a single line write up,"I need money to buy AC units or buy a car for my daughter", or they see the Pakistani loans with the same background props, they don't have any incentive to do their jobs. American people are stupid. They will give money to anyone, let us take them for a ride.

As one volunteer translator has pointed out that when she was in some country the NGO failed because many used the money to enrich themselves.

I would not have funded 30% of my loans if I had not let my emotions dictate the actions. Let me see how they finish their cycle.  Two things that are common in all of them are larger amount and very long repayment schedule.

Remember folks if one questionable loan fails, it is not just 1 lender that is pissed.  There are 40-48 of them.

[Jundee]

One way to boycott this is to not lend to these requests even if there's a shortage in the pipeline.

If the money dries up for these requests maybe the message will get through.

I like to help but I'm not going to throw my money away.