Week 14: Kiva and the Bolivian Potato Farmer

Distribution Source: YouTube, iTunesU, Kiva.org
Content Source: Kiva, PBS, Bill Clinton, Talkathon.org
Format: Video & Audio
Length: 50 minutes
Link:
The Story of a Kiva.org Loan
Bill Clinton on Kiva
Kiva on PBS

I'm going to start with this: I am extremely excited about this week's topic. Yes, it was interesting to learn that a grizzly bear can crush a bowling ball with its jaws or that organized crime makes up an estimated 15% of global GDP. But Kiva.org gets me more excited than even the iPhone's potential to transform the medical field. Kiva.org is a web-based, social networking-esque microfinance platform that allows anyone with an internet connection to make a loan of as little as $25 to an entrepreneur in a poverty-stricken country. It was founded just five years ago and it has already revolutionized microfinance.

The best way to tell the Kiva story is to explain the process by which (a few minutes ago) I made my first Kiva loan. After doing my due diligence on the site and its legitimacy (more on this later) - and with the seal of approval from Bill Clinton and Oprah - I signed up. I first created a username and password, then clicked on the "make a loan" tab. I proceeded to immediately get to work finding the entrepreneur to whom I wanted to lend. The site allowed me to target my search for the right borrower among other things by region, country, and type of business. I decided that I would make my first $25 loan to someone in Latin America, and in the "Food" business category. I was quickly drawn to the profile of a Bolivian potato farmer named Elias. On this profile I saw his name, picture, location and a description of what he would do with the $400 loan he needed (multiple people contribute to each loan). In this case he needed to buy potato seeds to plant, grow, and eventually sell potatoes, all to support his wife and four school-aged children.

After deciding that this was a loan-worthy cause, the finance nerd in me kicked in and I set about trying to figure out the likelihood that I get paid back. Kiva boasts an unbelievable 98.47% repayment rate, but this told me nothing of Elias' individual credit rating. From the profile page, I learned that the Kiva partner in Bolivia was a microfinance group called "Emprender." They were ranked 4 of 5 stars by Kiva, indicating a "Significant" likelihood of facilitating honest paybacks. They have also partnered with Kiva on over 2,300 projects over the last two years, with only a 0.37% delinquency rate. As for Elias himself, he has worked with Emprender for four years. Good enough for me. And if all this transparency isn't enough, look for yourself. Each loan has its own webpage, with all kinds of additional information, including expected repayment schedules and a list of all the lenders (scroll down on that link to see who my partners are on this loan).

As I was going through the loan confirmation process, I realized I could join a Kiva.org "team" and quickly decided on the Cornell team. This simply represented one of the thousands of mini-networks that live inside Kiva. While checking out, I indicated that I wanted my loan to count to the Cornell Kiva running tally and was pleased to see the total Cornell loan amount go from $6,300 to $6,325 following my loan to Elias. I was also able to send messages directly to other Cornell-Kiva lenders.

So this is clearly a cool concept - but why do I think it is revolutionary? It is revolutionary because it is an uber-transparent, bottoms-up, global, viral, reliable platform aimed squarely at the biggest problems on earth. And it works. And there's no bureaucracy. And you get paid back. And they've already made $129MM in loans since inception. Can you tell I love this idea?

Kiva is great because it leverages technology to empower individuals. These individuals, the borrower and the lender, are collectively starting to chip away at the anathema that is poverty and helplessness.

I could write another 10 paragraphs about how awesome this is, but instead I will let the facts speak for themselves. Below is Kiva's "balance sheet" - oh yeah, and they update these stats nightly for the world to see. Perhaps our government could learn from this approach?

Total value of all loans made through Kiva: $129,353,785
Number of Kiva Users: 694,924
Number of Kiva Users who have funded a loan: 442,194
Number of countries represented by Kiva Lenders: 196
Number of entrepreneurs that have received a loan through Kiva: 330,170
Number of loans that have been funded through Kiva: 180,952
Percentage of Kiva loans which have been made to women entrepreneurs: 82.28%
Number of Kiva Field Partners (microfinance institutions Kiva partners with): 111
Number of countries Kiva Field Partners are located in: 52
Current repayment rate (all partners): 98.47%
Average loan size (This is the average amount loaned to an individual Kiva Entrepreneur. Some loans - group loans - are divided between a group of borrowers.): $395.55
Average total amount loaned per Kiva Lender (includes reloaned funds): $186.50
Average number of loans per Kiva Lender: 5.43