Upon initial review of a loan posted by the new South African Field Partner, Womens Development Businesses ("WDB"), I was going to pass. This was because I noticed on Kiva's Field Partner page that the "profitability" of WDB was shown as -59.5% per year. I thought, no entity can lose money at that rate for long and remain stable. Then I noticed a link to WDB's own website, and I went there to check it out - that number for its operating losses was just *so huge*, it made me curious what they would say for themselves.
I learned that WDB has a corporate structure unlike that of other Field Partners I have seen. WDB, the MFI, is part of a group of entities called "WDB Group." Here is a link to their overview page:
http://www.wdb.co.za/site/group/index.html. I can't say I understand it fully, but it appears that WDB the microfinance company, a non-profit, was started first, in 1991. WDB the MFI succeeded in obtaining financing from Ford Foundation, Kellogg Foundation and others early on. An entity called WDB Trust was formed in 1996, as a charitable trust. Apparently WDB the MFI was able to obtain more donated funds than they were able to put to use in programs, or they received a big bequest in the mid-90's, or something. Anyway, in 1997 WDB Trust caused a for-profit company to be formed, of which the Trust is sole shareholder, called WDB Investment Holdings Ltd ("WDB Investment"). That for-profit company, according to the WDB site, manages a stock portfolio that throws off dividends, which are used to support WDB the MFI's programs. WDB Investment also provides consulting services as an income-generating activity, and that income goes to WDB Trust, and from there to WDB the MFI, for its programs.
I don't think there is anything one can meaningfully say about the sustainability of WDB the MFI and Field Partner, from these bits of information -- except that -59.5% is a number that probably refers only to WDB the MFI. That big negative number probably does not take into account that WDB the MFI is not dependent upon donations or government funding to make up for its operating losses. Instead, it has a captive, for-profit entity generating income - which might turn into losses, depending upon how well it is managed. I have not decided whether I will lend to WDB borrowers or not - but I have pulled back from my initial decision to reject the idea totally on account of the -59.5% number. I thought, if there are others on the forum who were deterred from lending to WDB clients by that number, this might be a useful post.
