May 2, 2013 KV Kiva HQ
By Amniya Shahbozova
New Field Partner: Supporting affordable financing with Kubo.financiero in Mexico
We’re thrilled to announce our new partnership with Kubo.financiero in Mexico! Through branchless banking and other innovative services, Kubo is bringing interest rates down and making financing more affordable for the people who need it most.



Did you know that in developing countries, informal lending is a very popular way to access money? Be it for personal use or to start a company, people are quite comfortable with the idea of borrowing from relatives, friends, neighbors and acquaintances. Reasons for this vary, but oftentimes they fall into three categories: a sense of comfort and flexibility, low or no cost of borrowing and no bureaucracy.

But there can be a downside to getting involved in informal lending. Because borrowers are not individually or thoroughly assessed in terms of risk, they can find themselves paying high interest rates and falling deeper and deeper into debt. The poor often become poorer, and breaking the cycle of poverty becomes very difficult.

Let’s take Mexico as an example. In this country, more than 90% of businesses are small or micro-enterprises, and many entrepreneurs must borrow to grow their incomes. But interest rates in Mexico are some of the highest in Latin America. This is true for two major reasons:

1) Many lenders, including banks, need to cover their operation costs even though they provide very small loans. Think of how much it must take to reach borrowers who live in the most remote parts of the country? It may require hours of transportation, gallons of gasoline, hours of loan officer time. Serving these populations is important, but it's not cheap. And the smaller the loan, the higher the interest needs to be to cover all of these costs.

2) Lenders and banks are unable to assess borrowers' risk on an individual basis. While some borrowers have rock solid business plans, glowing credit history, and the determination to repay, other borrowers may not be as sure a bet. Many microfinance clients, especially those in marginalized communities, must battle weather, local violence, and other odds to make a living. As a result, lending to them can be riskier. But in Mexico, borrowers are rarely categorized in terms of risk. As a result, high interest rates are often charged across the board to cover risk of default -- sometimes rates as high as 120%! 

At Kiva, we're proud to work with microfinance organizations that charge relatively lower interest rates between 55% and 85%. But we're always on a mission to make financing more affordable.

For all of these reasons and more, our new partnership with Kubo.financiero is crucial. We're so excited to support this innovative lending concept, and we hope to impact a considerable number of small and medium enterprises in Mexico. 

How is Kubo different?

Kubo enables borrowers to access credit at interest rates between 22% and 50% -- much lower, relatively speaking. But how does it achieve this? It's mobilizing technology to ingeniously address the two points above: operation costs and risk profiles.

Kubo is an online platform that provides branchless banking services, all via its website. This saves the time and money spent on serving borrowers out in the field where they live. Borrowers can apply online and submit all of their information (like credit bureau scores, verification of income, repayment capacity, references, etc.) to be reviewed. The platform even connects borrowers and Kubo staff for consultations about their future goals, business plan and more. 

At the same time, Kubo uses all of this client-provided information, including credit histories and other data, to create a tailored risk profile for each borrower. That way, it doesn't have to charge high rates across the board to cover all clients' potential risk. It also gives Kubo staff the opportunity to generate loan terms that set up clients for easy repayment and success.

If you support the idea of affordable financing, then these loans are the right choice for you!

LEND TO A KUBO.FINANCIERO BORROWER TODAY! Many lenders are interested in these loans, so we’re sorry if we’re out for now. More are on the way!

Have questions about KUBO? Want to learn about microfinance in Mexico? Send a note our way at blog@kiva.org.


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Amniya Shahbozova
Amniya was born in Khorog, Tajikistan, a city on the Tajik-Afghan border. After finishing high school, she obtained a scholarship to study Accounting, Analysis and Audit at the Finance Academy under the Government of Russia. After graduating and working for two years as an accountant in Moscow, Russia, she interned with Aga Khan Foundation, USA in Washington DC where she became interested in microfinance. She then completed an MSc. in International Business at University West in
Sweden and returned to Tajikistan, where she worked as Social Performance and Product Development Officer and later Product Development Manager for the First MicroFinance Bank (FMFB). While working for FMFB, Amniya facilitated the first loan program for Afghan refugees in Tajikistan with the United Nations High Commissioner for Refugees, and led the Bank’s development of Remittance Linked Savings for Tajik migrants in Russia. Amniya is an avid traveler, and loves
listening to music both from Tajikistan and North America.

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