Does Kiva provide entrepreneural training ?

[Guest]

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[kurt]

Microfinancing can only be a long-term success if money is lent to people who know how to run a business - this is important for the survival of the business owner, and also for the motivation of the credit lenders.
So my question is whether kiva or the filed partners support the small entrepreneurs with business training, if necessary ? Of course this involves additional costs, but with interest rates of up to 60% paid by the small businesses to their MFI, such mesaures for business sustainability should be possible (if not provided already anyway).

See also http://www.fileden.com/files/2008/2/2/1736224//GSDM%20JAN%202011.pdf 

[Peter S]

Hi Kurts (& welcome to Kiva Friends)

To answer the Kiva part of your question first, no it doesn't provide training to the entrepreneurs / borrowers, as it's just a lending platform connecting lenders to borrowers.  However, Kiva's choice of field partners is maybe increasingly influenced by, not just their financial track record, but also by the degree to which those institutions assist borrowers in ways other than purely financial.   See for example the blog post recently by Kiva's Senior Director of Social Performance, JD Bergeron:
http://www.kiva.org/updates/kiva/2011/01/28/kivas-commitment-to-responsible.html
edit: since the Kiva website is flaking out just now, this link should work if the one above doesn't:
http://kivanews.blogspot.com/2011/01/kivas-commitment-to-responsible.html
...where amongst other things he says: Many of our partners are chosen because in addition to lending money, they also offer services such as savings, financial literacy training and empowerment programs. - which is the kind of impact you're asking about, I think.

As far as existing field partners are concerned, some do offer services like financial literacy training, others not so much.  It's a question really of looking out for clues as to their mission in each partners Kiva field partner page, reading their website if they have one, and also checking out reports by Kiva fellows, where there's often a wealth of detail about how particular partners operate.

For a quick insight into what partners are offering these kinds of support, you could do a site-specific Google search with "training" or "education" and whatever other key words you might think worth trying, in the form:
site:www.kiva.org/partners training


cheers

Peter


edited to add alternative link to JD Bergeron's blog post

[kurt]

thanks Peter - yes this answers my question and you are right, I will focus explicitly on the filed partners' performance in rgard to this kind of training issue; as a whole kiva seems to be a really good scheme!

[cpbailey]

There are other types of education and training the MFIs may provide--health care such as AIDS awareness, domestic violence, nutrition, sanitation (for food vendors or at home), and so on.  There are some great benefits that poor receive that our banks don't provide!  How much interest is a Pap smear worth when it catches cancer in time?

Colette

[cjp1973]

This was posted on the GHAPE loans that were fundraising today:

The Grounded and Holistic Approach to People's Empowerment (GHAPE) is a non-profit NGO based in Bamenda, Cameroon. GHAPE works towards the empowerment of the poor and poverty alleviation through a highly multi-faceted approach. Every client is trained in business management, basic health, life skills, financial management, profits and losses, and family values. Clients are also required to contribute a small amount into a personal savings account; most clients save much more than the minimum requirement. GHAPE instils a sense of family and community within its clients and staff and has developed a strong bond of trust between the organization and its clients.

[Mona]

Here is another example for a MFI providing business training I got through an loan update provided by a Kiva fellow:

"... I first worked at ESPOIR's administrative headquarters in Quito. Here I learned about their products and services, and the philosophy behind their program. Even though their individual loan business is growing, ESPOIR's main product is village bank loans combined with education. The loan officers provide this education during the monthly village bank meetings. The combination of credit and education differentiates ESPOIR from other microfinance institutions, and the impact is huge, particularly for those borrowers who are able to fully implement their business training. As an additional benefit to their borrowers, ESPOIR also offers health services and education.

My favorite aspect of the Kiva Fellowship was meeting the borrowers. When I visited the field office in Portoviejo, I saw how the theory I
had learned at ESPOIR's headquarters was put into practice. Yadira Graciela and Rosa Melida are two Kiva borrowers I met who put their
loans and business training to good use. In addition to lifting themselves out of poverty, their businesses create jobs, and thus contribute to the development of their community.

Yadira Graciela Villamar Pinargote is a 31 year old clothing designer and mother of two. She has been a member of the "Nueva Portoviejo" village bank for over 4 years. With the help of the loans and education from ESPOIR, she has grown her business and now employs another person. In 2010 she participated in a provincial haute couture contest and took first prize!

54 year old Rosa Melida Aguirre Espinoza is the president of the "New Generation" village bank, and has been a member of ESPOIR for 18 years. Rosa Melida raises chickens and grows melons, rice and corn. Thanks to the trainings and her loans she has purchased additional farmland, expanded her business, and now employs two people.

....."

[cjp1973]

Thought this might be of interest to some of you.  I think it is a wonderful program.  Way to go BRAC Uganda

Currently there is 1 of these ELA loans fundraising  http://www.kiva.org/lend/356330

BRAC Uganda’s new Youth Loans

Starting this coming week, BRAC Uganda will begin posting a new loan product onto the Kiva website.  This new product will fund borrowers in BRAC Uganda’s Empowerment and Livelihood for Adolescents (ELA) program, and gives Kiva lenders the chance to invest in an exciting new sector within microfinance.

These new ELA loans are unique because the borrowers are actually adolescents, usually young women aged 16-21 who have dropped out of or never attended school.  Many of these borrowers are too young or lack the minimal collateral needed to participate in traditional microfinance, so the ELA loans offer them a unique way to access capital and become economically productive at an early age.  These “youth loans” can serve as a stepping stone that encourages the borrowers to seek more capital in the future, and to expand their businesses into larger enterprises that provide great benefit to the young women and their communities.

Another important part of the ELA program is that it doesn’t simply disburse loans; just providing first-time adolescent borrowers with loan capital could be risky for obvious reasons.  Instead, these loans occur in the context of a holistic program.  First, all ELA borrowers are part of an ELA “club,” which is comprised of 20-40 members in villages throughout Uganda.  The clubs provide a variety of services for the members, including educational materials and discussions on societal and health issues.  Those members interested in obtaining loans must first participate in livelihood training, which provides the participants with skills in income-earning activities.  Clubs’ livelihood trainings are preceded by market assessments which examine local villages’ economic climates and tailor training accordingly.  This helps ELA borrowers’ first businesses to be successful, well-run, and likely to succeed in the local community.  Finally, ELA borrowers must receive financial literacy training, which familiarizes members with concepts of profit, savings, and budgeting, helping ensure that borrowers can use loan capital responsibly.

These trainings all help to empower ELA borrowers with the knowledge they need to start successful business, despite their young age.  ELA microfinance loans then serve as a sort of capstone to the program, enabling borrowers to put all their knowledge to use and create businesses that will benefit themselves and their families.  These are the loans that Kiva lenders will now be able to fund!  ELA borrowers on Kiva will be posted as individual loans, with a typical loan term of 40 weeks; repayments and journal updates will occur just as they do for regular loans.

Kiva and BRAC Uganda are excited to offer this new opportunity to Kiva lenders, and hope that the Kiva community will be eager to fund the new ELA youth loans.  I’ve visited several ELA clubs in the field, and have been very impressed with the trainings that the borrowers receive and the professionalism which they all run their businesses with.  If anyone has any questions on the new loans, please feel free to leave comments and I’ll try to respond.  Look forward to the ELA loans going up on the Kiva site sometime in the next week – they’ll be posted on BRAC’s fund raising page, so keep checking on it!