What Guarantees Do We Have?

Discussion in 'Kiva | Loans That Change Lives' started by jetsetter, Feb 26, 2012.  |  Print Topic

  1. jetsetter
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    jetsetter Silver Member

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    I like what we have all been achieving via Kiva and I do feel good about helping others. However, I came across an article today talking about SKS, the world's largest microfinance service, driving its debtors to suicide.

    Here is the link to the article http://boingboing.net/2012/02/26/sks-worlds-largest-microfin.html

    What guarantees do we have that the same thing is not happening here with some members? I know there are many on their third, fourth, or even fifth lending cycles. But what do we know about other members that never come back?
     
  2. YULtide

    YULtide Gold Member

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    We don't have any guarantees, of course. Microfinance clients represent the range of humanity. Some humans commit suicide, sad to say. That said, I think Kiva has a good track record of dealing with reputable Field Partners who work creatively and positively with their clients. If the lending practices were leading people to suicide, Kiva would find out about it quickly.

    One very important asset Kiva has is its Fellows programme. By sending people out to check on what is happening on the ground, Kiva has eyes and ears that can spot this sort of problem.

    Kiva is not perfect for the simple reason that no human institution is perfect, but they have developed some very good mechanisms for ensuring that they are dealing with reputable Field Partners, and that on balance our money as lenders is actually doing the good that we intend.
     
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  3. gleff
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    gleff Co-founder

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    The article in question posits that the run up to the SKS public offering drove them to try to push loans way outside the bounds of their normal parameters and without an ability to integrate borrowers into their support mechanisms.

    Of course SKS denies the allegations, and I have no independent knowledge, but it would seem to me that the basic drives of alleged problems aren't present in Kiva's model. (Although actual repayment certainly matters to Kiva, so one imagines that there could be pressures to collect that are important in the short-term but counterproductive in the long-term, I'd weigh that against the non-existence of these programs and suggest that on net they're likely substantially positive even if there are individual cases that turn negative.)
     
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  4. jbcarioca
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    jbcarioca Gold Member

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    Whether the SKS allegations are well founded or not, Kiva and virtually all the FP's are non-profit, so have less motivation to "cook the books". Venality does exist in the range of human activity but incentives do make a difference. For profit Micro-lenders are a difficult case, because of the very intense support and operational oversight always required in micro-lending.

    Even though I think the risk of these abuses is low in the Kiva model eternal vigilance is called for.
    Those are my thoughts, for what they're worth.
     
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  5. jbcarioca
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    jbcarioca Gold Member

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    It certainly does include the option to deal more with non-traditional loan sources, such as the recent partnership with a Kenyan University for educational loans. That certainly is a departure from classic MFI's.
     
  6. iolaire
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    iolaire Gold Member

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    MicroPlace.org referenced two blog posts in their newsletter that talk about the issues facing microfinance:
    We'd like to highlight two new blogs this month, both addressing key issues within the industry.

    The first blog is from one of our issuers, Oikocredit-USA. Sharlene Brown, Oikocredit-USA's National Director, interviews Steve Wright, Director of Social Performance for Grameen Foundation, on why poverty measurement and outreach is important. Check out their blog to learn more.

    The second blog is the newest addition to our Two Cents on Impact series. Independent blogger Lonnie, goes over a topic fresh on everyone's mind borrower interest rates. Following her last blog, she discusses some of her findings concerning borrower rates and talks to Sharlene Brown, National Director of Oikocredit-USA.


    I'm not a microfinance doubter (as it related to Kiva and Microplace) so I've not really read them but feel they would be of interest to those with questions.
     
  7. JasonFromZidisha

    JasonFromZidisha New Member

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    Having measures in place to verify the borrowers information is vital to the security of MFIs. Without responsible partners the industry would'nt be what it is today.
     
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