Technical Issues with Kiva.org Website

[Guest]

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[AccountAbility]

Since I am not familiar with the API data, could you explain what you are seeing as a discrepancy. 

It seems like a pretty important issue if I am reading your comment correctly.

Dan

[YowieFreak]

Since I am not familiar with the API data, could you explain what you are seeing as a discrepancy. 

It seems like a pretty important issue if I am reading your comment correctly.

Dan

The "local payments" exposed through the API are invariably smaller than the local payments seen on the "advanced" repayment schedule of the entrepreneur's page.

eg API (first repayment is 1012.6 PEN) -v- website (first repayment is 1022.46 PEN)

This reflects the fact that the MFI distributes a loan to the entrepreneur for some local currency amount.  The MFI then loads the details at some later time onto Kiva's system, at which point Kiva converts the amount borrowed to USD$ and increases the amount to the next multiple of USD$25, perhaps from USD$200.01 to USD$225.00.

(The same problem exists even if the "local" currency is in USD$, if the amount borrowed by the entrepreneur is not a multiple of USD$25.)

Kiva then raises this higher amount from lenders, sends it to the MFI, which "backfills (plus a bit)" their bank account.

I have suggested, to no avail, that the "next multiple of $25" issue can be overcome by simply sending to the MFI (once the loan is fully-funded) only the amount that the MFI actually requested, and applying an immediate "recredit" to lenders for the excess.

That same methodology would also get around exchange rate fluctuations between when the loan is posted and when the amount is provided to the MFI - just raise a bit more than what was originally requested, but only send the MFI what they want and give the lenders back the extra.

It seems ridiculous that the MFI is having to keep track of two different sets of repayment figures - one from the entrepreneur to them, and one from them to Kiva.  (E.g. is there was a $200.01 loan where they were given $225 by Kiva, they have to remember that for every $10.0005 that the entrepreneur gives them, they have to send $11.25 to Kiva.)


Edit:  P.S.  I have refrained from posting about this before because it could become severely embarrassing for Kiva - money not going to the entrepreneurs at all has got to be worse than money being pre-disbursed to entrepreneurs - but Kiva have had enough time to resolve the issue (or at least mention it somewhere in the help text) and they haven't bothered, so I'm not going to refrain any longer.

[David2051]

Wow!!   

[iampaul]

This reflects the fact that the MFI distributes a loan to the entrepreneur for some local currency amount.  The MFI then loads the details at some later time onto Kiva's system, at which point Kiva converts the amount borrowed to USD$ and increases the amount to the next multiple of USD$25

Okay, I wondered about it. I guess I had to know it was something like that because common sense told me that there was no way the math could keep working out so perfectly to $25 increments in spite of exchange rate fluctuations. I just kept turning my back on it.
 

Paul

[AccountAbility]

Thanks Ian for the elaboration.  Rounding issues have long been the weak underbelly of the whole concept. 

But I agree that your alternate solution makes more sense than sending the excess on to the MFI Field Partner and then getting it back in installments.

Dan

[Mona]

Call me superficial, but I have to admit that this is one aspect of the lending process I as a lender do absolutely not care about. I agree that it should be indeed explained somewhere in the explanation of the lending process so that those who want to understand even the last details of the whole process can find it. (Though I have also to admit that I personally took it as self-evident that there must be some rounding somewhere. But obviously it is not and so, yes, it should be explained somewhere.)

However, I do not see the necessity why the process should be changed. If it makes the process easier for Kiva and the MFIs then I am ready to lend them some extra cents as long as the loan runs. If it would be a problem for the MFIs I am rather sure that they would tell Kiva so and then the system would be changed faster than each of us would think. And if not, why should we ask to change a running system and make things instead more complicated, blocking by this the capacities of Kiva and the MFIs that are needed for more important things? We could of course ask Kiva to put this on their to-do list to find a perfect solution for it, but if I should vote for it, give it a very low priority.

Transparency yes, but also simplicity where it makes sense. But these are of course just my 

P.s.: An easier solution could be to make the lending amount smaller, e. g. to $10 as it is on Wokai. This would not only make the rounding difference smaller but encourage maybe also more new lenders to make loans to whom $25 seem too much to start with. And it would also make our "basket-sharing problem" smaller as more people would be able to participate per loan. Hah, I think I like this idea! 

[YowieFreak]

However, I do not see the necessity why the process should be changed.

I guess I think it should be changed because of two things:
1) As far as I know, the MFI gets to keep the excess money if the entrepreneur defaults on their loan, even though that money was never part of the loan supplied to the entrepreneur.
2) In many cases the lender is accepting currency exchange risk on the excess money, even though that money isn't being used for the purpose that the lender provided it.

Edit: Pressed the "post" button and immediately thought of a 3rd reason:
3) When Kiva was being attacked over the discovery by the press of the "pre-disbursal" of loans, a lot of emphasis was placed on the fact that "despite loans being pre-disbursed, we can assure you that the loans people make go to the entrepreneurs specified" (my paraphrase of many messages I saw, both from Kiva and from other press sources).

For example:

Clarifying How Kiva Works
------------------------------------

"In the spirit of clarity, we want to state a few facts:

....

2. Kiva Entrepreneurs do receive the loans listed on the Kiva website.
Kiva works with Field Partners on the ground that are under legal contract to ensure that each Kiva borrower listed receives their loan funded on the Kiva website. Kiva conducts audits to ensure that our Field Partners are doing this. To suggest that this is not taking place is to suggest that Kiva's Field Partners are in violation of their contract with Kiva."

Naturally, that didn't actually "clarify" anything - it just muddied the waters a bit more.

[JohnR]

It seems ridiculous that the MFI is having to keep track of two different sets of repayment figures - one from the entrepreneur to them, and one from them to Kiva.  (E.g. is there was a $200.01 loan where they were given $225 by Kiva, they have to remember that for every $10.0005 that the entrepreneur gives them, they have to send $11.25 to Kiva.)

Couldn't the MFI simply pay back the excess the first month repayments are posted.  E.g., when the MFI forwards the first $10.0005 payment from the borrower it adds the rounded up portion.  Then they'd only have to keep track and be exposed to currency risk for one month.

I know that's not as elegant as your solution, but it's something the MFI can do now, w/o waiting for Kiva to change its practices.

Or am I overlooking something?

John

[iampaul]

Couldn't the MFI simply pay back the excess the first month repayments are posted.  E.g., when the MFI forwards the first $10.0005 payment from the borrower it adds the rounded up portion.

Since Kiva operates on a net billing system with the MFIs, there really isn't any valid reason I can see why the excess needs to go to the MFI in the first place. Ian's approach makes much more sense to me:

I have suggested, to no avail, that the "next multiple of $25" issue can be overcome by simply sending to the MFI (once the loan is fully-funded) only the amount that the MFI actually requested, and applying an immediate "recredit" to lenders for the excess.

Ian, may I ask to whom this was suggested and if there was any response at all?

BTW I do like Mona's idea of smaller increments as well, but I would prefer eliminating the issue over shrinking it. Also there might be an issue of higher costs associated with processing a greater number of transactions, but that's just a guess.

Paul

[Mona]

Seems the "Sort by" list is now completely acting strange. I remember having read somewhere that some new loans appeared lately just on top of the expiring soon list. And now I have just found out that the "repayment term" list does not give the shortest loans first. We have e.g. some loans up now that have only 5 months repayment term ending August 2010 (e. g. http://www.kiva.org/lend/183559). But they are displayed after 6 months loans that are paid back in September 2010 (http://www.kiva.org/lend/183782).

Or am I overlooking something? 

*Edit: Even stranger, now all is back again to normal. Hmmm ...