Micro-finance, micro-loans and Kiva

A lack of credit is often a real barrier to farmers and small traders expanding their business or recovering from shocks. To increase the productivity of your farm, for example, it helps to have improved seed varieties or fertilisers. To get those, it helps to have credit to buy them. You need money to make money, as the adage goes, and it doesn’t always take huge sums to make a difference. Yet as a dirt poor farmer, there aren’t many banks willing to give you a loan, which is where micro-finance institutions (MFIs) step in.

A friend back home paid me for something unnecessarily. She suggested I do something useful with it. So, rather than just frittering it away, and as something of an experiment, I’ve loaned it through Kiva: an outfit that allows people to give small loans directly to people in developing countries, working through partner MFIs. I’ve no idea how much the credit crunch in the US and UK will impact on access to credit elsewhere, but it seemed appropriate.

I would have liked to have given it in Afghanistan, but although they have one partner listed here, they don’t seem to be taking loans for anything. I’m surprised there aren’t more MFIs registered, as several exist in Afghanistan and all would benefit from extra fundraising. But there are a lot of problems associated with loans here. A lack of security and infrastructure for one, but also of regulation, Islamic laws on interest (not that you earn any through Kiva), and the likelihood of borrowers defaulting. Kiva has certain criteria it requires of partners and perhaps MFIs here are unable to meet them. There does seem to be a lack of particularly innovative enterprises on their website which suggests they play it pretty safe when choosing who to work with.

In Afghanistan, many people borrow off neighbours or market traders, and often owe huge amounts of debt, in cases effectively becoming bonded-labourers. While there’s been some research questioning the benefits of MFIs in Afghanistan given the presence of other mechanisms of loaning and transferring cash, I haven’t got round to reading it yet.

Anyway, as there was nothing doing in Afghanistan I’ve lent the cash to a person in Tajikistan: a neighbouring ‘stan that lacks the news value of war and is just stuck with mundane old poverty instead. Two people actually, as I couldn’t decide which. There’s something that feels rather odd about ‘shopping’ for people to loan to but it’s better than child sponsorship.

I loaned 75 dollars each to two women who live in area called Jalollidini Rumi (a name I liked) who both need 1025 dollars in total (it’s been less than a day since then and writing this and they’ve both nearly raised all of that). One sells bicycle parts in the local market and wants a loan to expand her business. The other has a fruit and veg stall, and wants to expand by selling potatoes wholesale in the off season. Bikes and spuds: both down as ‘good things’ in my book.

This is the spiel from the website:

Hosiyat Nosirloeva lives in the J. Rumy region. She is 42 years old, is a widow and has 4 children. Hosiyat has a high school education. She has a sales location at the local market where she sells bicycle parts. This business is the main source of income for her large family. Right now, she would like to purchase products from wholesalers. Hosiyat plans to pay back her loan over 12 months.

Kutfiya Hojababaeva lives in area Jalollidini Rumi. She is a widow with two children. Despite her difficult situation, being single with two children, Kutfiya began working. She works in business. She sells vegetables and fruit in a market. She has been doing this for two years. She plans to increase her sales by selling potatoes wholesale in the season when people are stockpiling them. If she sells her product wholesale, she can make good money and pay off her loan in 3 months.

(Incidentally, what with increased grain shortages/prices, the humble potato is getting more of the attention it deserves in the fight for food security.)

There are html links to their details but I haven’t figured out how to embed it in WordPress yet. I don’t know how much there is in the way of monitoring and reporting on the people you lend to, but what there is I plan to track here.


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12 Responses to “Micro-finance, micro-loans and Kiva”

  1. Roberta Says:

    What a great idea! I followed the links out of curiosity and could only find one of the women you sponsored, after scrolling through all 56 in Tajikistan. Odd, I thought. So I clicked on the one that did appear (the bicycle parts vendor) and saw a plethora of people who had sponsored her, including Harry from Afghanistan. (Hey — upload a picture — a mountain or a river or something, o anonymous one. Or you in a burka. Or you in a fundraising and equally disguising beard http://buildabeard.helloatto.com/.Whatever.) So I clicked on the Harry non-picture and saw you were sponsoring two people, that one and another one. The other one was indeed the potato vendor, and guess what, she has reached her target, and so, quite properly, has been withdrawn from immeditate visibility. Kiva is so cool. Kiva’s blog, which I only just looked at thanks to you, quotes some authoritative keynote speaker saying “If the Web needed a reason to be invented, this is it.”

  2. Roberta Says:

    The correct link for the Build a Beard for Kiva malarkey (you photoshop, they donate) is
    The “whatever” just kinda snuck in there.

  3. Peter Says:

    I have looked at kiva.org since a while. Me too, I believe in the principle of duty to break the cycle of poverty. And using micro-financing as a vehicle to empower the individual rather than the institution.

    We are organising a small fundraising dinner this evening, and I will look at good opportunities to invest it in MFI projects.


  4. Jim Says:

    The only Kiva partner in Afghanistan is Ariana Financial Services. It was established by Mercy Corps (www.mercycorps.org) and is doing great work with women in Kabul. You know, one of the reasons they are having trouble posting enough borrowing opportunities for Kiva supporters is because the husbands often refuse to allow the women to have their photos taken and posted on the site. It’s been very frustrating for Ariana. But I hope you’ll give them a chance through kiva in Afghanistan. They’re doing a great job under very challenging conditions.

  5. harryrud Says:

    Thanks for the info about Ariana, Jim. If they’d had a loaning opp I would have certainly given them a chance. Can understand the difficulty of photos – have come across similar issues myself – but am suprised if that means Kiva won’t support a borrower, just because they don’t have a photo. That would be crazy, especially here.

    A photo of me in a fake beard or a burqa, Roberta? Crazy as well, but anything’s possible…

  6. harryrud Says:

    Update: a sudden splurge of Kiva related activity:

    The Road to the Horizon blog is donating 1$ for every comment on this post: http://www.theroadtothehorizon.org/2008/11/rumble-change-starts-here-roads-social.html

    and there’s more discussion about it at Aid Workers Net: http://www.aidworkers.net/?q=node/1820

  7. Marianne Says:

    Great work – I’ve been fielding lots of “what can I do” enquiries and I’m always on the lookout for good ideas. Lots of folks do actually want to do something decent if given half a chance.


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  9. MerrY Says:

    I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

  10. Ruby @ Getting Cash Fast Says:

    Kiva does a great thing, as long as they’re allowed to do it!

    Thank you! This is just what I was looking for. Keep up the great work!

  11. internationaldevelopmentprojects Says:

    Hi. I am interesting in discussing micro finance and I have recently been blogging on the same issue looking at the difficulties with it… with the hope of creating suggestions for improving the system.

    It would be great if you could take a look at the piece and let me know your thoughts… any of you is!

    It’s on the one called Microfinance… screwing people.

    I think this blog is definitely worth adding to anyone’s blogroll and I look forward to discussing microfinance in more detail!


  12. markaz18 Says:

    This comment comes two years too late but I it hardly matters because I found your post pretty informative. I’ve decided to follow your blog and can’t wait to see what else you’ve shared with us

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