More thoughts about Kiva

Back in November last year, I wrote a brief post about Kiva and encouraged people to join our Kiva lending team.

It’s a microcredit scheme where you can lend $25 to an entrepreneur in a poor country.

Kiva seemed like a great idea and our team has made several thousands of dollars in loans to some very diverse projects. However, Kiva also is now being used to fund entrepreneurs in the USA. Hang on! I thought that the US was the richest country in the world? Don’t get me wrong, there are would-be entrepreneurs in almost every country in the world, and that’s a good thing. But shouldn’t those in the rich, developed countries be funding their ventures by means other than Kiva? If I’m faced with the choice of helping someone to set up a new business in Cambodia or someone in America, then I would choose to fund the Cambodian.

Somehow it doesn’t seem right to show a photo of an attractive young American woman, sitting in a nice office with a modern computer and other modern electronic equipment, who wants to borrow a few thousand dollars to buy marketing materials and lists so she can do direct email marketing. OK, so there are poor areas and poor people in the States. But people don’t have an infinite amount of money to lend, and lending to an American who wants to spend it on email marketing takes money away from, say, a Samoan who needs to buy fishing nets to create a business of use to the local community.

Another thing I’m not delighted with Kiva about is that I was part of a group who lent money to a man in Central Asia, to help him to buy new equipment for his cafe business. He paid back, but I was slightly taken aback to be told that the loan had enabled him to buy a refrigerator and pay for his daughter’s wedding. I’d never have agreed to lend money to enable a wedding party to go ahead. If you can’t afford a big “do” then don’t have one, and spend the money on something useful instead.

Yeah, I know there are cultural norms and some people might not have minded lending to pay for a party. And in fairness, the update didn’t actually say that he’d spent the loan directly on the wedding. But I was left with the distinct impression that the loan had allowed him to spend his own money on the wedding when he could have used it to buy the fridge – so in effect the loan had been for the wedding. (A so-called “fungible” loan, in other words. A bit like giving aid for essentials to a developing country, allowing it to spend its own money on a swanky new palace for the President.) The fact that he was applying for a further loan reinforced that impression. I would have preferred to lend for something more useful.

So, whilst I still think that Kiva is doing a great job in many ways, I’m becoming a bit disillusioned about some of their activities now. Perhaps the Americans could set up their own microcredit organisations to help their citizens who want to be entrepreneurs. I for one will make my Kiva loans to poor people in poor countries – I had thought that was what Kiva was all about.

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