By Jason Jones, Kiva Fellow, Nicaragua
Borrower Verification. Anyone who considers them-self to be a regular visitor to the Kiva Fellows Blog has most likely come across this topic on more than one occasion. It’s a common task to check off on the official TO-DO LIST of the average Fellow, and I, as a current member of the group, am no exception. Since most of us cringe ever so subtly at the sound of such titles as “auditor” or “microfinance cop”, however, we seem to try to put a more positive spin on the whole idea. After all, who wants to dwell on the shady side of the industry? As a collective group, we’re typically strong believers in the economic growth and productivity associated with supporting entrepreneurship on a micro level, as well as the benefits that come from supporting a “bottom-up” approach to development, one that provides struggling entrepreneurs with a way to lift themselves out of poverty. It’s that whole idea of “hey, stop your whining and pull yourself up by your bootstraps!” mixed with a softer-socially conscious-love your neighbor- peace, my brother-spread the wealth-fight the man-can’t we all just get along-teach them to fish-mentality. Ahhhh……such a harmonious blend.
“It’s a great way to get to know the borrowers in the field”, we think. Or, “it’s not YOU, it’s US”, we tell the local MFI. “Of course it would never be the case here at…….It’s just that Kiva has had some problems with fraudulent activity in the past, and we’ve got to cover a few bases”. “Don’t worry. I’m sure there will be NO problem”. The truth of the matter, though, is that this little aspect of a comprehensive fellowship in microfinance really does involve playing the role of an auditor. Sadly, when there is money at stake (regardless of the number of zeros trailing that dollar sign), someone, somewhere is going to devise a plan to profit from the system in a “less-than-100%-honest-and-transparent” manner. Whether it’s the loan officer that disburses loans to fictitious clients, or the branch manager that issues “ghost-credits” that miraculously end up in their personal bank account, it’s unfortunately an all-too-common part of the business. Often times, one’s ability to profit in such a manner is limited only by one’s creative imagination, and for that, there is an extra barrier known as the…….cue music…..Borrower Verification. In other words, in an organization dedicated to honesty, transparency and simply keeping everything on the up and up, the Borrower Verification is a vital link in Kiva’s chain of truth, justice and the lack of all around shadiness.
Being the good fellow that I am (read: personal affirmation), I had finished my “BV” relatively early in my four-month stint. Besides, I really AM one of those folks that avoids associations with such icons as the cubicle or recycled office air. I’m more about getting “out there”, which lead me to view the entire process with a healthy dose of anticipation. I carefully compared all loan details between the Kiva database and the MFI’s internal system, I armed myself with photos of the borrowers and all information associated with their credits, trekked far and wide (OK.. really not that far or wide) across Nicaragua to meet with these individuals in their homes and businesses and verified identities, loan terms, payment plans and everything else that could be verified within reasonable limits. In the end, as was proclaimed in my “everything will turn out great…it’s just a formality” speech mentioned above, everything really DID check out! Well, maybe I should say that almost everything checked out. It wasn’t that I had stumbled across any obvious fraudulent activity, per say. It’s just that in one small case, the results had been less than 100% conclusive (I’d say 80%).
It all started back in June. After gathering all necessary information and completing the front-side of the audit (doh!…there’s that word again),I packed up the camera, client photos, loan documents and a small snack before heading out to the field in search of Loan Recipient “X”. Initially, all went smoothly. I caught the local bus which lead me to the microbus, that lead me to the branch office about an hour or so away from my initial location. I found the right people at the branch office, jumped on the back of a motorcycle (note…when given the choice, ALWAYS choose “driver” over “passenger” in such circumstances) and arrived at the clients house after an additional thirty minutes or so. As an added bonus, the client was even home! But this is where things start to get a little cloudy. You see, when I say that the client was “home”, you’re probably picturing someone coming to answer the door in response to a knock or ringing of the doorbell. In this case, however, the client being “home” technically meant that the client was “in front of” her home. More specifically, the client was “in front of” her home with no key. To make matters worse, it turned out that her loan papers and identification were located in the same house for which there was no available key.
“You mean you really have no key to the house?”
“But you do live here, right?”
“I do live here. It’s just that my mom has the only key, and she’s not home right now”.
“Do you know where she is?”
“I’m not sure”.
“Do you know when she’s coming back?”
“Can we go find her on the motorcycle?”
“I don’t think so”.
“Can we call her?”
I know what you’re thinking. You’re thinking that I should have just accepted defeat and rescheduled for another day. After all, it wouldn’t have been the end of the world to simply leave it at that and try again within a week or so, right? The problem was that this whole process (roundtrip, etc.) was a 6-8 hour endeavor. And it wasn’t just my personal time at stake. The client had to make sure she was available, and the loan officer had to block off time on his schedule as well. Ideally, there was no time like the present, and since Kiva has some flexibility built into the process, I was going to make a valiant attempt at salvaging what I could.
The first step was to verify the identity. The good news was that the person standing keyless in front of her home was the same person smiling ever so sweetly on Kiva.org. But since she had no available identification, I really didn’t know who this smile belonged to. Enter…neighbors. After speaking with two different ones, both of which identified her as “X”, I felt reasonably confident about Step 1…identity verified. Next….loan details.
“So you don’t have ANY of your loan papers with you?”
“No, they’re in the house”.
“And there’s absolutely NO way we can get into the house?”
“Not without the key”
“OK, let’s just chat a bit about the loan and see how things go”
In the end, the client was able to provide most of the information requested. I certainly didn’t get the idea that there was anything unusual or dishonest taking place. I mean after all, if someone was asking me about payment dates and amounts of a loan I had, I’d probably know much less than she did. Besides, this whole locked of the house scenario really did seem like a legitimate logistical snafu. So with my 80% certainty, I hopped on the back of the moto and began the journey back to Managua.
“80% certainty is pretty good”, I thought as I sent the information to Kiva’s home office in San Francisco.
“Yea, pretty good. But is it good enough?”
Would it be good enough for you?
……part II of this entry will be published September 25, 2011