Group Loan Question

[Guest]

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[alan]

I have a question about Group Loans, which is a little involved. Please read the details carefully.

About a week or ten days ago someone on a team posted a message indicating his unwillingness to fund group loans. In the discussion he claimed that group loans are run like lotteries in which the group applies for a loan, and then somehow one member is chosen actually to receive the whole loan. The purpose would be to take out a loan that exceeds the maximum.

So, I responded by posting an extract from the FAQ on Group Loans which clearly states that all members of the group receive a loan. Then, I found this loan, for $2800:

Las Violetas Group

Felipa Huaman Puclla is President of the Alcom la Violetas, and lives in the district of Comas, in Lima, Peru. She is 56 years old, separated from her husband, and has four independent children. She is responsible for caring for her three year old neice, which she she says provides her with the strength necessary to move forward. For the last four years she has operated a store from her home and, little by little, and with the help of loans from EDAPROSPO, she has improved both her economic and personal status. She will invest the majority of the loan of S/ 1,000.00 [approximately US $2800] to further supply her store and, with any leftover money, will improve her home.

As you can see from the quoted description, it is very clear that the president of the group is going to use the entire proceeds of the loan. The other 9 members of the group apparently will not receive anything.

So, my question:

Am I reading this correctly? Do you know if this is an acceptable use of a group loan (notwithstanding the FAQ) or is it, as my correspondent indicates, a "creative" way of getting around the maximums?

I e-mailed contactus on Tuesday but so far no answer, and I imagine I won't hear again until at least Monday, hence the new topic here.

Many thanks for all input.

[Peter S]

Hi Alan

I think the Kiva translator has tried to be helpful and got it wrong.  The Spanish reads "...el dinero desembolsado S/ 1,000.00 lo invertirá para surtir su bodega y con lo que le sobra seguirá haciendo mejoras en su casa." - with no mention of US $2800

Looks to me as though she will be receiving what the Spanish version says, 1,000 (nuevo) soles, which is about $334, and therefore in line with her fair share of the total loan.

cheers

Peter

p.s. the forum software is telling me someone else has posted, but it's not showing me their post.  So maybe you have got the answer in stereo...

[DoubleR]

So, my question:

Am I reading this correctly? Do you know if this is an acceptable use of a group loan (notwithstanding the FAQ) or is it, as my correspondent indicates, a "creative" way of getting around the maximums?

I e-mailed contactus on Tuesday but so far no answer, and I imagine I won't hear again until at least Monday, hence the new topic here.

Many thanks for all input.

Hi Alan,

As Judy and Peter have already pointed out, the converted USD amount of Felipa's loan was incorrect.  As a volunteer translator myself, I avoid stating the converted USD amount unless it was part of the original text (although I may have done it once or twice in the past).  Also to give you some background on group loans, some Field Partners will highlight one or two borrowers in the group so that the lender will have someone that they can connect with.  Others will provide cursory descriptions for each group member.  Group loans are not "lotteries" as implied from the other discussion thread.  The field partner would be placing its Kiva partnership in jeopardy if that type of fraudulent practice was uncovered in a routine audit.

Also, thanks for alerting ContactUs about the error.  Hopefully they will pass your feedback to the Translation/Editing teams, which will help improve the quality of future loan translations.

Regards,
Ronan

[alan]

Thank you all for your responses. If the problem is in the translation, as it appears is most certainly the case, then I am relieved. The lottery idea struck me as a serious abuse, and I wanted to be very certain before remotely suggesting anyone had engaged in such a practice.

[Unilove]

I agree, alan. 

What is amazing is to me is how quickly one can get thoughtful and researched answers from knowledgeable Kiva Friends

[Limesarah]

This looks like it's not the case for this loan, but you will also still sometimes see individual loans to members of groups -- each member's loan is posted individually, but the description mentions that they're part of a solidarity group. 

[cpbailey]

Some partners have had a slightly different approach to group loans.  In some cultures, it is customary to pool what few resources are available--say 20 people who are connected by family or close friends will each put in $10.  That would be $200, and each person would have a period of time to use the full amount.  No one has much, but together $200 can buy in bulk to jump start a business.  The problem is that no one has much money to pool, and it makes things really difficult to really get ahead!  Microfnance means that the group could borrow perhaps $1,000. This greatly increases the money within the 20 family system.

Another approach I have seen is that a group of (women in this case) got a larger loan and would do a cooperative business venture which was seasonally appropriate.  I think the original loan was for one thing, but they made soap as a group.  Then they would get into the original loan type of business after.  The group is responsible as a whole to repay.  Instead of many tiny businesses, they take advantage of wholesale concepts.

It is interesting to see different approaches used in different situations!

It seems that translation is the situation here, though.

C-