Kiva means a lot to me. I discovered it by chance in November 2014 and I was immediately captivated. This moment set me on a journey that has so far led me to quit my job in London, volunteer in South America and to start working for Camfed.
What is Kiva?
Kiva is a microfinance organisation that aims to “connect people through lending to alleviate poverty”. It was founded in 2005 and the numbers are impressive. Kiva has partnered with microfinance institutions all over the world so that 2.6 million borrowers in 86 countries have received loans that were crowdfunded by 1.6 million lenders for a total value of more than $1 billion!
As a lender, you can scroll through thousands of borrowers’ profiles and choose who you lend to*. You can filter by gender, country and loan purpose, as well by financial criteria such as repayment period. Each borrower also has a short profile with details about their circumstances. Once a loan has been fully funded, the money is disbursed by Kiva to its field partner. It’s then up to the borrower to put the loan to use and maintain their repayments, although the field partners often help their clients by providing additional financial services such as entrepreneurial training and literacy skills.
The pros and cons of Kiva and microfinance
I’m not going to go into detail here, but it shouldn’t come as a surprise that the reality of micro‑finance is complicated.
As I’ve said, the idea behind Kiva – and microfinance in general – appealed to me straight away. If money (or cash flow) is a big reason that people are trapped in a cycle of poverty, then connecting those people to financial institutions and a crowdfunding loan platform sounds like a great solution. Kiva is unlike traditional charity in two key ways: (1) most of the time you get your money back, meaning you can lend the same capital multiple times (or walk away after having put your money to use); and (2) the borrowers choose how they use the money (a common criticism of traditional charity is that Western money imposes its value system on recipients).
On the other hand, this scathing article from 2014 is a good summary of some arguments against Kiva (it includes many links that would be good further reading if you’re interested). *One of the main criticisms is a lack of transparency, for example about the fact that the money you lend on a particular borrower’s profile doesn’t go to that borrower; rather, it goes to the field partner (who in many cases has already disbursed funds to the borrower in question).
It’s hard to ignore an article like that, even after reading Kiva’s response. Not that you should ignore criticism, I think it’s useful and probably essential to be sceptical and keep an open mind to different points of view. One thing I would add is that the field partners vary a lot and should really be considered individually. Whilst some might charge three-figure interest rates, many rates are far lower and others provide far more innovative solutions; take Camfed, for example, which lends to young women who agree to repay the “interest” in the form of social service (you can find out more about Camfed’s Learner Guide program here).
Me and Kiva
I joined Kiva three years ago and I’ve lent nearly four times as much as I’ve deposited on the site. Many times, simply visiting the Kiva website, reading the borrowers’ profiles and making a loan has cheered me up. More importantly, though, Kiva has sparked a passion in me: to dedicate myself to making a difference to the lives of those who are less fortunate (there must be a better way to phrase this). I’ve also learnt to look deeper, beyond the superficial, and to ask questions.
I don’t lend on Kiva as much as I used to and I won’t be depositing any more money (I haven’t done for two years now). My focus is to learn more about international development, about where I fit in and about how I can do good better (hopefully more on this soon).