By James Allman-Gulino, KF11 Uganda
Hello Kiva community and friends, my name is James Allman-Gulino, and I’m part of the new Kiva Fellows class (the 11th class since the program’s creation!). By way of introduction, I hail from Washington, DC, and work for Deloitte Consulting LLP. For the next six months, however, I will be in Uganda working with three of Kiva’s partner microfinance institutions (MFIs), or, as you see them called on the Kiva website, “Field Partners.” The Field Partners I will be working with are BRAC Uganda, MCDT SACCO, and Pearl Microfinance Limited. Those reading that have lent to entrepreneurs on Kiva through these Field Partners might also want to join their “friends of” lender pages (Pearl’s page is here, and there are newly created pages for MCDT and BRAC Uganda).
As I’ve been getting ready to leave and have been telling friends and family about my fellowship, many have been curious about what the organizations that I’ll be working with actually do. I realized that a lot of people, even experienced Kiva lenders, may be unclear as to the role that Field Partners play in the Kiva process. So, here’s a quick rundown:
- Field Partners are responsible for the actual administration of Kiva loans to client entrepreneurs. This roughly includes: identifying entrepreneurs who cannot access traditional financial services, gathering their information and picture (which goes on a borrower profile), actually disbursing the loan amount to the borrower, assisting the borrower with any problems they face over the loan term, collecting repayments, and updating Kiva lenders about the status of the borrower’s business.
- Field Partners’ clients often live in very remote areas, and sometimes have no way of making loan repayments except by cash. This means loan officers often have to go out to these areas and visit clients individually to administer loans, which takes up lots of time and creates a very large expense for the Field Partners. For a rough idea of the time and effort required for loan visits, check out this video by a previous Kiva Fellow.
- Field Partners have to get capital (aka…money) to loan funds to individual borrowers. This is where you come in, by making loans on Kiva! But even though Kiva doesn’t charge Field Partners interest on capital, that certainly doesn’t make the funds “no cost.” The borrower profiles, journal updates, and individualized accounting information that Field Partners produce for Kiva and its lenders end up significantly raising the partners’ operating expenses.
- Many Field Partners provide additional services to borrowers besides access to loans. This might include micro-insurance, client savings accounts, financial literacy classes, business enterprise advice, or health care services. But like anything, these services cost money, and must be financed by revenue from the Field Partner’s loan portfolio.
So as you can see, Field Partners do a very wide range of work, and expend a lot of energy delivering financial (and non-financial) services to the borrowers you see posted on Kiva. This leads me to a quick point about the interest rates that Field Partners charge borrowers. These interest rates are often significantly higher than those seen at banks in the developed world, which sometime leads to indignation from those who perceive the high rates as exploiting poorer borrowers. The issue also came up prominently in a recent New York Times article about an MFI’s interest rates (see Kiva’s response as well). It’s a legitimate discussion, and when poor borrowers have no other options to access credit, MFIs certainly can exploit those populations by charging overly high interest rates and absorbing the profit. However, in most cases this is not true – the high interest rates simply reflect the very high operational costs that are inherent to microfinance. For more discussion on the interest rate debate, feel free to check out postings on the Fellows Blog or the CGAP Microfinance Blog for some good insight. Feel free to leave comments as well, particularly if you have any lingering questions about the typical activities and operations of a Kiva Field Partner. Thanks everybody §
James is currently serving as a member of the Kiva Fellows 11th class (“KF11″) in Kampala, Uganda. If you’ve been interested by the post, get involved by making a loan to BRAC Uganda, MCDT SACCO, or Pearl Microfinance Limited today!