Kiva, debts and Islamic lending

I’ve been paid back a little money that some woman in Tajikistan owed me (and didn’t even have to send the heavies round, thanks to Kiva), and loaned it to this chap in Afghanistan:

Khayr Mohammad is the son of Dost Mohammad. He is 43 years old and he lives in Kabul Afghanistan. He is married with three children and he has a metal shop. He has been involved in this business for more than 6 years and he wants to make his business larger. Khayr has requested an individual loan of 50000 Afghani for the term of 15 months. He wants to buy new machines for his shop. Khayr is very happy with this loan process and he hopes to continue his involvement with both AFSG and Kiva.


Would you trust this man with your money?

50,000 Afghani is about 1,000 US Dollars. In a survey we carried out in Ghor province, households’ cash debts almost doubled between 2007 and 2008, averaging 1,500 USD, plus debts in-kind of wheat that amounted a large proportion of their harvest. Considering the poverty of these people, that is a vast amount. The drought last year meant people had to borrow more just to survive, and the global food price rise meant the amount they had to borrow was even higher than normal.

Not everybody would be as happy with the loan process as Khayr Mohammad though. A friend was looking for a loan to pay for his wedding, the costs of which are typically several thousand dollars. He was offered a loan through a Micro-Finance Institute similar to AFSG (Ariana Financial Services), but had to turn it down. His parents see the loans offered through MFIs such as these as un-Islamic and so would not allow him to accept. Islam does not allow interest to be charged on loans; money cannot beget money. MFIs get around this by charging an administrative fee instead of interest, but for some this is a thinly veiled excuse.


6 Responses to “Kiva, debts and Islamic lending”

  1. ash Says:

    something to think about…mmm.

  2. transitionland Says:

    What IS it about Afghan guys not smiling in photos?

  3. transitionland Says:

    Seriously, I look at field office photos from my work’s project in Kabul and the group pictures are ridiculous. The expats have these goofy grins and the Afghans look like they’re about to be told some very bad news.

  4. Peter Says:

    Go for Kiva! What is not very clear though, is the chain of ‘middle man’. While Kiva is not charging overhead, as you point out, the middle man is (or at least charging an admin fee)…

    And in some cases, I am sure there are several middle men..


  5. Roberta Says:

    Still no women to lend to in Afghanistan, I take it?

  6. harryrud Says:

    Not through Kiva, nope. Not yet…

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