Interest Rate - N/A

[Guest]

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[ngungo]

Two MFIs I am most interested in are Mekong Plus and TYM Fund from Vietnam with listing interest rates N/A and 12% respectively. 12% is good, but why N/A? Mekong Plus has been with Kiva for 6 months now. Any idea?

[wind5001]

Hi ngungo,

and welcome to this forum. There's been loads and loads of discussion about interest rates in here. It all boils down to that there is no accurate reporting at all on Kiva's side...we have not had any feedback on that from Kiva. It remains a little frustrating.

Oli

[ngungo]

It all boils down to that there is no accurate reporting at all on Kiva's side...we have not had any feedback on that from Kiva. It remains a little frustrating.

Thanks.

[Diane R]

ngungo, the answer is actually a good one, in this case:  Mekong Plus charges *ZERO* interest to their clients.  If you read some of the recent Journal entries for Mekong Plus loans, there have been several references from Felix Lam to the fact that their clients, having no interest to pay, were better able to be successful now than they had been with previous loans where they had to pay interest.

So in this case, "N/A", from what I understand, really DOES mean "Not Applicable".    (They should probably put in "0%" to be explicit about it, though.)

--Diane.

[ngungo]

Yeah! I feel more better ...

[cpbailey]

So who covers expenses to pay staff, and all the papers and such for loans?  (I am getting an odd thought of each borrower bringing in a chicken, a bag of rice or an embroidered pillowcase.)

Colette

[Peter S]

ngungo, the answer is actually a good one, in this case:  Mekong Plus charges *ZERO* interest to their clients.  If you read some of the recent Journal entries for Mekong Plus loans, there have been several references from Felix Lam to the fact that their clients, having no interest to pay, were better able to be successful now than they had been with previous loans where they had to pay interest.

So in this case, "N/A", from what I understand, really DOES mean "Not Applicable".    (They should probably put in "0%" to be explicit about it, though.)

--Diane.

I've always taken "average interest rate borrower pays to Kiva Field partner N/A" to mean "Not Available", rather than "Not Applicable", because sometimes you see N/A stated against the "Average local money lender interest rate"..for example ProMujer Bolivia.   Obviously in the case of Mekong Plus loans, it should be stated as 0% to avoid any confusion.   Now that I'm aware of that, I'll be looking out for their borrowers.

~~Peter

[RichardF]

The hard-core reality is that a 0.0% interest rate to borrowers is non-sustainable.  Someone is paying the cost of Mekong Plus operations.  Unfortunately, we're not informed who that is.  Considering they are a five-star field partner, something is amiss.  Personally, I don't consider this to be an acceptable level of communication to Kiva lenders. 

[ngungo]

Now that I'm aware of that, I'll be looking out for their borrowers.

Now that I have more competition

[Peter S]

The hard-core reality is that a 0.0% interest rate to borrowers is non-sustainable.  Someone is paying the cost of Mekong Plus operations.  Unfortunately, we're not informed who that is.  Considering they are a five-star field partner, something is amiss.  Personally, I don't consider this to be an acceptable level of communication to Kiva lenders. 

They attract plenty of support from mainly France, Belgium & Holland, but also Canada, the EU etc - long list of reputable donors and supporters here on their shared (with Viet Nam Plus) website.   Seems Mekong Plus is the Belgian side of the operation, Viet Nam Plus the French.  They solicit contributions from individuals.

I notice their loans are extremely small - you have to go to page 33 of 33 in the list of their loans sorted by amount to find one over $100, and the average for active loans is $74.

So, extremely small loans to extremely poor people, by what appears to be essentially a well-intentioned charitable NGO rather than a "proper" MFI.  In that light the 0% interest rate seems to me to be fair enough, even if you have to dig a bit to piece it all together.

~~ Peter