Working with Community Economic Ventures (CEVI) in the Philippines I have come across
the most passionate, forward thinking bunch of individuals who really care about
the community in which they operate. They are of similar mindset to the lenders,
Kiva staff, and us fellows. They are a part of this because they really care. Of
course, they have operational costs! They have staff. They need to distribute the
money. The loans are small.
* Kiva loans make up a maximum of 1/3rd of their total operations (for the purposes
of risk) – can you imagine the confusion of some loans being zero interest and some
3 23 February 2010
I don’t know about you but I’m pretty confused by the concept of a zero interest
loan in general. The fact if the matter is if you borrow money you get charged interest
and this is happening globally. It would not be fair to give Kiva borrowers 0% interest
while others pay the full amount. And I think equality is a big part of what we
are trying to do here.
* What is the interest rate on your home loan? Is it fair?
Perhaps not – but you have to pay it. So you pick the best rate on offer and you
roll with it. YOU MAKE THE CHOICE that the capital gain will offset the interest.
This is exactly what these entrepreneurs do. Don’t doubt their intelligence. Sure
they might not always make the best decisions but neither does everyone in the developed
world. That’s just life.
* Do they have better option for access to capital?
I think that in these situations it’s best to ask the borrower’s! Here is part of
an interview with a CEVI client who directly talks about her loan with CEVI and ‘small
interest’. She is slow to speak as she is translating into English so please bear
with her. I promise you this video was shot before I was aware of the blog comments.
Food for thought on the need for Microfinance Institutions
* Can you imagine the logistics of getting the exact same $25 that you donate
to Kiva into the hands of a lady who lives somewhere that is not accessible by road,
only by foot?
If you are worried about microfinance reaching the poorest of the poor then you know
that “exact”person to person money transfer is impossible. I urge you to suck it
up and realise that you are possibly contributing to that person’s next loan. Or
read about Kiva’s new philosophy on lenders taking on loan risk in Claude’s Fellows
* How on earth could Kiva be expected to have enough local knowledge in the 52
countries around the world and the ability to disburse funds in numerous different
languages when Kiva is a small operation with extremely dedicated individuals, on
small pay and low operating costs themselves?
What Kiva manages to achieve, for the number of staff is amazing BUT Local knowledge
is imperative – Kiva NEEDS the MFIs.
Please don’t let perceivably “high” interest rates and the presence of microfinance
institutes deter you from lending on through Kiva! Be realistic and jump on the
website now to get reloaning!