Kiva Community Conference Call with Premal Shah, Dec 17th 2008

[Guest]

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[dh]

...
Assuming Kiva would implement the new policy effective 1 January 2009
...

Premal indicated that the new policy would be deferred and probably introduced later in 2009 as part of a package including the aforementioned auto-relend facility. Specifications for auto-relend, or auto-matching, as Premal called it, have not yet been developed. Very roughly, you would be able to specify criteria such as "women in Uganda in the clothing sector" and balances in your account would then be lent automatically according to these criteria in a way matching the active Internet community's lending. This was suggested as a possible alternative option to donating to Kiva's operational expenses. Questions such as whether you would be able to reclaim these funds or whether you could temporarily decide to put your Kiva account in auto-matching mode were not addressed. Premal said that a future conference call might solicit lender input on the design of the facility.

Other plans for 2009 included better lender-side capabilities for identifying delinquent loans, publication of feeds and APIs to enable outside developers to provide customized presentation services (e.g., superior alternatives to My Portfolio), and a richer team ("Community") experience incorporating features similar to those of yelp.com.

New money contributions are down, so the budget will be slashed from $6 million in 2008 to $4.5 million 2009. This will result in fewer new countries being added. Donations are now being made with only around 50% of loans [, significantly lower than the number cited in the early days of Kiva].

[Dottie b]

. . . This will result in fewer new countries being added. . . . .

I think this is a good move. It must be terribly expensive to set up a relationship with a field partner - visits, due diligence, risk, etc. Much better to focus on the best of the partners they already have!

There for a while, if I lent from my Kiva credits, I was not asked to make a donation. I see that has changed. When we got our windfall refund a few months ago, I did a lot of re-lending without making a donation. I send a separate donation once or twice a year instead of a few dollars at a time. But it must mess up their statistics.

Dottie B

[Jan & John]

New money contributions are down, so the budget will be slashed from $6 million in 2008 to $4.5 million 2009. This will result in fewer new countries being added. Donations are now being made with only around 50% of loans [, significantly lower than the number cited in the early days of Kiva].

Kiva already knows from me that I used to do the 10% donation until I found out that I couldn't claim a Canadian tax receipt - so I have been saving my 'charitable donation money' for Canadian registered charities

I suppose I should consider it a 'user fee' for all the fun I get out of Kiva but how can I resist Canada's 29% deducted from my tax dollars
jan

[A Nonny Mouse]

I greatly enjoyed the conference call. 

I had no burning questions to ask, so I was content to simply listen.  I was more interested in what the tone of the conversation would be like, and how questions were handled.

It was such a kick to hear the voices of the KFs who spoke!  I love being able to put voices with the words/pictures of friends here on KF...and of course, to hear Fiona, Premal, and Austin.  I could even hear the chatroom sounds from Fiona's computer as people entered chat and posted their questions.

I strongly encourage everyone to participate in the next one if you can, if only to listen.  I felt very encouraged after the call was over, and quite frankly was still so wired later that night that I was dancing about in my kitchen while making dinner!

For those of you who are technologically hesitant, it is much easier than any computer task you might try.  Don't let the fact that you may have never participated in such an event stop you. 
- Your best bet is to either use a phone with a speakerphone, or use a headset plugged into your phone.  This call lasted over an hour, and that's a long time to hold a receiver to your ear!  Most modern phones have a headset jack, and headsets can be found at most electronics stores.
- When you are not speaking, keep the MUTE button on; this makes it easier for all to hear the person who is actually talking.
- When you dial in, an automated voice asks for the code number, you enter it, and you are connected to the call.  If the meeting leader (Premal, in this case) is not there yet, you are put on hold and you listen to hold music until the leader arrives.  That is all you have to do.
- If you should dial in after the call has started, the other people on the call hear a small beep to know that someone else has joined the call.
- Not comfortable with asking your questions out loud on the phone?  For this call, Fiona was in the chatroom, and read out the questions posted by those in chat who were unable to be on the call.

Premal made it clear he is interested in our input.   Yes, there are communications issues, and other serious things...but what other company is willing to put themselves out there like this?  I work for a very large insurance company that talks customer service, blah blah blah all the time, but NEVER have I seen them make themselves available to their customer base as Kiva has.  Kiva is walking a difficult and uncharted path: on one hand, trying to provide good customer service to their "customers" (us lenders) and on the other, dealing with developing countries and their logistical/cultural/physical/technological issues that most of us in our modern lives have absolutely no grasp of.  (Never mind the part about trying to keep a non-profit afloat in the current painful economy.)

As for me, I feel better about things Kiva now.
 

That's my story, and I'm sticking to it.

Nonny   

[Elizabeth]

Bless you, Nonny, for your personal insight into the call. I appreciate Peter doing the topic write-up, but the minutes don't give the overall tone and feelings behind the words. I couldn't be there, but I am feeling better about Kiva recently with their efforts to reach out to the lenders. You very eloquently reminded me of the many other problems on their plates, so I am personally grateful that they have taken time to speak to us directly.

I try not to be cynical about the whys and wherefores of the recent efforts, so I just go on faith. As I told another KFer, "In my heart I believe these things will all work out in the end, and I should just focus on the sharing and caring aspect of Kiva and not the fine print."

...yes, time for some chocolate... 

[P, B and J]

I thank you for your post and info too, Nonny!  And Diane and Peter for the taking of notes and sharing the info here.  And of course I thank Kiva for all their efforts too.  I can't do the conference call when/if there is another one, being in Canada I think it would be a bit too expensive for my wallet to handle.  But the ability to participate via chat and also get info threads here on the forum makes it accessible to all in some way or other.  I feel Kiva has their heart in the right place and this is all very encouraging! 

 

[ulrike]

• Could someone briefly describe what it would mean for the lending community to "bear the currency risk" in layperson terms? That is, will it cost lenders more, will they lose funds, etc

In last few months US$ has appreciated highly against other currencies.  Only a few partners have been mentioning this. Kiva encourages field partners to have a hedging mechanism, and Kiva won't be >30% of any MFI's portfolio. Premal talked about the possibility of giving the partners the ability to share catastrophic currency risks with the lending community.  For example: Pearl Microfinance in Uganda (which was named by Premal just as an example) has raised over $500K on Kiva. When they are posting a profile from Kampala, they could click a box saying they want to share currency risk with lenders. The first say 10% of decline against the dollar, Pearl would bear the risk, the remaining loss would be borne by the community. How can we do this in a way that would keep it simple? Say in a year you lend $25 to Uganda and they check the "share currency devaluation beyond 10% with Kiva lender". See note "you are responsible for currency devaluations..." Each month when there's a bill repaid, if the Ugandan shilling declines beyond 10%, lenders would receive slightly less back.

Hi,
I wonder how the exchange rate issue is handled in the « netting procedure ». If The MFI has to pay back 1000 $  for one lender the 15th of january and raises 1000$ for new loans   the MFI  doesn't have any impact from the modification of exchange rates. Does it work like this right now?
The problems will start for MFI's which have been paused or have problems to send  or get funded enough new loans to KIVA. In this case they are obliged to send money to KIVA with the new exchange rates and they might (will?) have big problems seeing the actual important modifications of exchange rates (see for example the blog about Ukraine : http://fellowsblog.kiva.org/category/countries/eca-eastern-europe-central-asia/ukraine/)
In this system as long as the activity  of an MFI doesn't go down the impact of the modification of the exchange rates is the sum which can be lent to the enterpreneur, since the value of the $ has changed between the moment the loan has been posted and it will be funded and disbursed.
Now for the proposal of  Premal:
 Supposing that the foreign curency has devaluated by 20 % since the loan  have been made the first time and  if you would apply the proposal of Premal and the loaner agrees to share the risk above 10 % of the currency risk the loaner will get back  900 $  and in the netting procedure 100 $ have to be sent to the MFI in my above example. If you think of the example of Ukraine (a loss of nearly 50% of its value in two and a half months. ) the loaner might get back only 600$. 

So if I understand the actual system correctly, the  modification of  exchange rates doesn't have any impact on loaner and MFI's as long as the amont of the MFI loans is stable or growing and it can be disastrous when the MFI is paused or shrinking.  In the new system the loaner might loose money because of temporary variations of exchange rates but the MFI's are  partially protected  against currency risk .
Can anybody confirm my description of the two systems?

Thank you

Ulrike