By James Allman-Gulino, KF11 Uganda
I’ve now been in Uganda for 5 months, and today is the last day of my Kiva Fellowship. Naturally the fellowship has had its ups and downs, but on the whole I’ve had a fantastic experience here working with Kiva, BRAC Uganda, and MCDT SACCO. I feel very privileged to have gotten the chance to see how microfinance really works on the ground, and how it impacts the lives of borrowers. Along the way I’ve amassed a few thoughts about my time here, Kiva’s operations, and microfinance in general, which I’ve tried to distill into a quick final blog post. Before I go into it though, I just want to thank everyone who I’ve worked with here in Uganda, as well as the people back home (my family and Deloitte Consulting, in particular) who made my fellowship possible. Enjoy:
Kiva’s values are important:
I’ve always been interested in working towards alleviating poverty on the international scale. Lots of organizations try to do that, through various means. But I think that the values that underpin how Kiva tries to address global poverty are unique, and beyond that are vital to the organization’s mission. For all those unfamiliar with what Kiva primarily stands for, check out this page. Kiva’s three core values are:
- Dignity: Kiva works through partnerships where both the microfinance institution (MFI) and Kiva are treated as equals, instead of a donor-recipient relationship where the recipient feels beholden to comply with donor wishes. Kiva’s dynamic affords MFI partners more freedom to conduct operations without a distracting donor breathing down their neck, and requires that the MFIs take responsibility for their own operations. I think this the only way to effectively address poverty, because if donors are able to hold access to funding over recipients’ heads as a way of eliciting compliance, it essentially dis-empowers and marginalizes the recipient instead of equitably empowering them.
- Accountability: Along the same lines, because all of Kiva’s funding is in the form of loans, it requires field partners to be financially responsible with Kiva capital and use it to make productive investments. I was amazed to learn by talking to several different Ugandans about how many microfinance institutions here are funded largely by donations, and how the difficulty in tracking bulk donations sometimes leads to those MFIs’ leadership spending a lot of the money on themselves. Kiva definitely does not work like this. Kiva thoroughly researches their partner MFIs’ operations and finances before beginning a relationship, and the requirement that MFIs make monthly repayments to Kiva prevents that money from just going into an administrator’s pocket.
- Transparency: One of Kiva’s most unique characteristics is how transparent the organization is. This is reflected in the availability of field partners’ portfolio yields (a rough measure of their interest rates), disclosure to lenders about when borrowers default, and in our continued efforts to publicly and clearly explain Kiva processes to the public. Additionally, if something goes wrong in its operations or those of a field partner, Kiva is not going to hide it. For instance, while I was at BRAC Uganda, it was found that the old Kiva Coordinator had not been following Kiva processes properly. Even though we resolved the issues with the new Kiva Coordinator, we still divulged the irregularities in the form of journal updates (for examples, see the journals on the pages of Moureen Nambi or Mwayikuma Basalaki). I find this to be one of the most appealing things about Kiva’s practices – it makes it clear that Kiva has nothing to hide or obscure, and that we are honest about the difficulties and problems involved with microfinance lending. To me, this helps keep lenders realistic about how microfinance loans work and what impact they may or may not have.
Kiva promotes cross-cultural exchange:
Kiva is great in the way its zero-interest capital can help MFIs expand loans to more borrowers, and save on financial costs that would otherwise limit their outreach. But in all honesty, most MFIs’ operations would still go on even without Kiva funding. However, Kiva is extremely valuable because of the cultural exchange it promotes. Borrowers hear about how lenders in the U.S. and Europe can see their business profiles on the Kiva website, and they take great pride that these lenders want to contribute to their specific business. Some valuable exchange also happens when Kiva Fellows visit and volunteer information to borrowers about their host countries. Several Ugandan borrowers that I talked to, for instance, thought that everyone in the U.S. was uniformly rich and traveled everywhere in jets. Many were astonished to learn that there were millions of poor people in the U.S., or that not all Americans were white.
Conversely, it’s also been great for me to learn more about Uganda: its people, climate, language, food, etc. I will bring this information back to my friends and family, and hopefully transmit it to others through my blog posts. So in this way Kiva is quite powerful in facilitating cultural exchange: it encourages people to relate to one another authentically, and discourages stereotypes and oversimplifications (i.e. all Americans are rich, or all Africans are poor). To me, this exchange is every bit as valuable as Kiva’s financial contributions to MFIs.
A Kiva Fellowship is extremely valuable:
I like to think that I contributed some small value to the Kiva field partners in Uganda that I worked with over the course of my fellowship. But in all honesty, it’s probably me who got the most value out of the experience. I strengthened my skills in accounting and basic financial management; got familiar with how loans actually work (I’ll thankfully know what “amortization” means now when I get a mortgage); learned how to acquaint myself to another culture; and most valuable of all, got to interact with borrowers and learn about the difficulties of poverty first-hand. The fellowship has also helped me to think more carefully about poverty and critically analyze the strategies to address it.
So all in all, I’m incredibly thankful that I’ve been able to do the fellowship and learn all that I have. For those who can manage the commitment, I think the fellowship is an incredibly gratifying and worthwhile experience, and I highly recommend applying. While a fellowship might not be everything you think (and believe me, it’ll be quite challenging and frustrating at times), you definitely won’t regret it. And please do feel free to contact me via my lender page, as I’m very happy to talk about my fellowship experience.
Microfinance isn’t a “solution” to poverty:
If there’s been one consistent theme of my posts, it’s that microfinance is not a one-off solution to poverty. I don’t say this to be a downer or minimize the impact of microfinance (indeed, all the borrowers I’ve met in Uganda have been extremely grateful to get loans, and have told a multitude of stories about how loan capital has helped them expand a profitable business, pay school fees for their children, shift away from a dangerous profession to their own new enterprise, etc.). I just say it to emphasize that poverty is an extremely difficult and complex problem to address, and loan capital is only one very tiny part of anything that could be considered a “solution.” My fellowship has strengthened my belief that microfinance is certainly an effective component of helping borrowers lift themselves out of poverty; but it’s just one component.
And for me, someone who’s always wanted to have a career based on alleviating poverty, I’ve come to the conclusion that microfinance is probably not where I’m going to focus. I went to public policy school, and I distinctly saw problems in Uganda through a public management lens. As I commented in an earlier post, even after a borrower gets loan capital, they still need decent roads to bring their products to market; civil servants and police who won’t force them to pay bribes; and good public health infrastructure to allow them to be healthy and work productively. Sadly, these things are still quite lacking in Uganda and many other developing nations. So that’s where I see the greatest potential to help, which is why I want to focus my career on effective public management of resources, and supporting good governance in developing nations. But I’m still extremely glad that I got to work in microfinance and see how it works on the ground; nothing during my fellowship has shaken my belief that it is an effective way to empower borrowers and help them address poverty on their own terms. Even though I don’t see myself working directly in microfinance in the future, I do hope to help create good policy environments where microfinance can function effectively and bring tangible benefit to the lives of borrowers.
And last but not least, since I’m text-heavy as usual, I thought readers might enjoy a selection of photos from the course of my fellowship. Thanks everyone for your continued reading, and I hope I’ve converted you to enthusiastic Kiva users by now (I’m on my 42nd loan now, but hope that some of you might challenge me for the first to 50!). Best wishes-