How necessary is Kiva?

[Guest]

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[Dottie b]

Something I'm curious to learn (and maybe I will from the UNCDF Microfinance Course) is just how necesssary is Kiva?

Don't get me wrong - I love it, love the connection with the borrowers, and love that it makes us more cognizant of what people around the world are doing with their lives - but how important is it to the borrower, ultimately?

I gather that if Kiva were not around the MFI's would still have access to money. Borrowing through financial markets will cost them in interest, but do they reduce the interest rate for their Kiva-funded borrowers, vs. the others?

Is this just a feel-good program or does it really make a difference?

Anyone have any information?

Dottie B

[AccountAbility]

Dottie - I think Kiva does/will do three necessary things.

Even with the rating system, Kiva is willing to work with new one-star partners by giving them a chance to gain credibility.  In the meantime Kiva money can make all the difference in where and even whether they get enough funding to meet their borrowers needs.

Secondly,  By reaching the almost 100,000 lenders personally, Kiva is doing a yeoman's job of spreading awareness and consciousness of the needs of the poor around the world and at least one concrete way that individuals can make a difference.

Third, as Kiva continues to ramp up, it should reach critical mass where their significant amounts of zero interest monies can actually impact partner practices and their growth in healthy ways.  If it can be delivered efficiently, it should have the power to drive down interest costs to borrowers. (Although we need to be careful about concluding what is a fair "rate")

Dan

[cpbailey]

Dottie,

I suspect that Kiva increases a partner's available funds for loans.  In an Azerbaijan partner for example there was a huge board with future loan applicants...waiting for loans.  Kiva has helped reduce that backlog enormously.  They just didn't have enough cash to loan to all willing and available borrowers.  If it is first come first served, sometimes loans need to be made in a timely manner or it isn't effective.  A loan to purchase Christmas/holiday inventory would be very timely.  To purchase crops at the harvest means lower prices than obtainable a couple months later.  Animals may have waves, too--babies are weaned or school fees require selling animals (oversupply and good prices).  An office supply business may have inventory needs when school is starting.

Look at Countrywide here.  People are leary of depositing money because of all the loan defaults.  So Bank of America bought convertible bonds--invested in Countrywide so it didn't have to declare bankruptcy.  Kiva is giving an infusion which can be regular.

Colette

[MannImSchatten]

Hello,
I am asking the same question on a regular basis. Although I do not have any definite answers, maybe something I have learnt may be found useful or interesting.
1) I considered Kiva as a great idea without the knowledge of its impact back in December 2006. The amount of many lent via Kiva lenders was a bit over 1 milion. Now it is 10 milion. So it is still just the begining. Kiva does not have yet a global impact. Maybe it never will have a truly global impact.
2) So far Kiva supportet some 15 000+ loans. But there are more than 200 000 000 people in need of acces to microfinance loans. Only some ~20% have acces to microfinance so far, and a great deal is on a "for profit" base. So Kiva's 15 thousand is a drop in the sea. Yet, dont forget, it is just the begining, it may saturate at 100K, maybe at a couple of milion loan ... who nows ... in any case it is a new concept, and financial power of milions of individuals is (to my most honest belief) still greater than a that of a couple of rich banks or governments.
3) I like to browse through Kiva partners MIX profiles. There you can learn how big of an impact did partnership with Kiva have for that particular organization. Very often, they supply number of loans in order of several hundreds or thousands per year, yet just within last couple of months they could add additional 500+ loans thanks to Kiva. So localy the effect is huge. For example the Iraqi IAAC started with initial 100K$ from USAID, thanks to Kiva thay added another 74k$ in last 3 months. For many others, partnering with Kiva incresaed their "pool of avalable money" by 20-40% within 1/2-1 year, although such an organization was more or leas stagnating for last couple of years. So it is a lot of important and strong impulses on many different local scenes. And yet again ... it seems to be just a begining.

I hope this makes some sense, and is a bit helpful.

[RichardF]

Hi MannImSchatten, nice points. 

I like saving starfish too! 

[Dottie b]

Thanks, MannImSchatten! That was helpful!

Dottie B

[Laurie]

Dottie B, and good and thoughtful question... and it inspired many good answers.  It is a pleasure to see some new voices and opinions on Kiva Friends!

As for me... before we moved into our motorhome and began traveling, I had read in our local newspaper about local, neighborhood microfinance lending groups that met once a month to select borowers and make a group loan.  This was my first exposure to microfinance. I am not sure of the mechanics of these transactions, but I am certain it was not as easy as lending through Kiva. 

Since we no longer are part of a local community, this was not an option for us, though I was very interested in microfinance lending.  When I saw the Frontline story on Kiva, I zipped immediately to the (crashed) website.

Perhaps Kiva is not *necessary* for the borrowers (though the many excellent posts point out it's usefulness), but it is necessary for ME.   

Safe travels,
Laurie

[Jill]

     The question posed by the thread--
the seriousness in the way it was framed,
the good heart behind the raising of it...
 and

the seriousness and the good hearts of all those who replied,
and all there was/is here both to learn and to ponder...

    This is just to say,

    Reading all this,  feeling what there was behind the words, well....
"this" is one of the main reasons I looked for,
found,
and most of the time, why
I feel terrific pleasure and good fortune in hanging out with all you KivaFriends.

Thank you.