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Archive for the ‘microfinance’ Category

[fellows blog fodder]

People always enjoy picking things apart from a distance.  To me it seems like microfinance has taken a bit of a beating in the last eight months or so.  Most probably that’s because it was about eight months ago that I became immersed in this world when I started my fellowship as a KF9, my first foray into the industry.  But I also think it’s because of the rapidly growing attention microfinance has gotten over the last half-decade, from a nobel prize, to the proliferation of interesting organizations like Kiva and other online funders springing up, as well as bold claims like “microfinance will cure poverty.”

Microfinance’s publicity has paved the way for skeptics and critics to jump at the opportunity to point out every findable foible.  There’s been a fair amount of recent talk here on this blog, but also even running in places like the New York Times, about interest rates in the industry. Questions have emerged regarding whether or not it’s unfair to levy rates on the poor that some see as usuriously high (I’m making that word up if it doesn’t already exist).  And I won’t lie, my thoughts and feelings towards microfinance over the last two placements have been more sobering than rosy, and I’ve come to a lot more harsh realizations than poverty-eradicating epiphanies.  However, I think there is an important aspect that many long-distance observers miss, and its something that took being out in the field to notice about microfinance institutions and their role in the world.  So I’ll share. (more…)

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[from ze fellows blog]

Upon arriving here at BRAC Sri Lanka in February, a brand new Kiva pilot partner, I was all ready to lace up my loan posting shoes and hit the ground running.  And my MFI was ready and waiting for me.  BRAC Sri Lanka decided to designate two districts as “Kiva” districts and upload borrowers from these regions to the website.  BRAC offers similar products within each region, so the “Kiva regions” were all set to have a reduced interest rate due to the fact that the money from Kiva to finance these loans would be arriving at 0%.  However I quickly learned how ambitious our initial posting targets were, especially in months 1 and 2 in the pilot phase on the website. (more…)

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[from this blog where we fellows write things]

Sometimes you think you are equipped to take on a difficult situation and use your experience and skills to dive in headfirst and solve it, or at least provide some help to improve upon the current status quo.  It may be a situation you’ve seen before, or one where you know your skill set or knowledge is applicable to improve it – at least if you were tackling this problem in a familiar and native environment.  And that’s exactly the problem right there, and why as a Fellow I’m having to throw some things out the window.

In October I came right from the overworked office life of public accountants bustling about in tall shiny skyscrapers.  We used and heard words like ‘will you pdf that to me?’, ‘draw up a process map’, or ‘run an amortization schedule in excel’ everyday.    Every employee was armed with a laptop, and within 6 months nearly everyone becomes an excel wizard.  Literacy in Microsoft Office, the internet, and all other things technology is completely assumed as a given to be in EVERYONE’s arsenal.  So naturally these tools get used a lot in day-to-day work, pretty much for everything we did.

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map of the SRI

I apologize for the awfully-punned title but I really couldn’t resist.  Coming down from a humidity-induced fog, I can’t be expected to think clearly or use proper blog-titling judgment at this point.  I’m writing this post from beautiful Colombo, Sri Lanka, as I look out the door to a coconut tree from the head offices of brand new Kiva partner, BRAC Sri Lanka.  Not only is BRAC Sri Lanka a brand new Kiva partner, but so is this teardrop-shaped island nation of Sri Lanka.  I have the privilege of serving as a Kiva Fellow in the class of KF10 to help bring this partnership online and posting loans from across the country so lenders can learn a bit more about this fascinating South Asian nation while funding local businesses.

Sri Lanka is an interesting country for Kiva.  Like several other countries across the world, the central bank imposes certain requirements about funds entering and exiting the country.  So the Central Bank of Sri Lanka is taking a chance on Kiva by granting the ability to work in the country under the conditions that BRAC Sri Lanka borrowers on Kiva are: below the Sri Lankan poverty line, receiving a reduced interest rate from BRAC, and that funds wired from Kiva must stay in the country for at least 12 months.  So this can complicate things a bit.  However, due to Kiva’s net billing model, lenders can receive their repayments as BRAC Sri Lanka continues to fund loans in excess of their repayments due.

The BRAC SL office with aforementioned coconut tree

Basically (more…)

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Well as many of you know I am continuing my duties as a kiva fellow in about a week, and somehow the opportunity presented itself to me to go to sriiiiiii lannnnnnka.  After a little initial hesitation, I started to become insanely excited for this opportunity as the country sounds like an absolutely beautiful place, and the people sound amazing as well.  Additionally, the country has gone through a ton in the last decade.

A devastating 2004 tsunami, which initiated lots of aid and subsequently development programs (ahem, microfinance and my reason for being there).  And as recently as May 2009, a nearly 30-year civil war was finally ended with the official ousting of the LTTE (tamil tigers rarr).  But it sounds like the underlying ethnic tensions within the country that fueled the marathon civil war are still largely unaddressed, and the country is in somewhat of a state of flux.  On top of that, just a week or so ago the country had their first presidential elections since the end of the war, with the incumbent president winning, despite some questions as to the validity of the whole process as well as some violence and several deaths in the weeks leading up to the citizens hitting the polls.  While I have just grazed the surface of the complicated and fascinating history of this former-colony and Buddhist/Muslim/Hindu/Christian country, I am beyond thrilled to get there and see everything it has to offer.

And perhaps most valuable of all in this whole fellows experience, will be the contrast that it presents with everything I’ve seen in Armenia.  Going from a landlocked, 98% Christian country in the Caucusus to a tropical island paradise coming out of a civil war will be a great lesson on the ‘global impacts’ of the provision of financial services.  Plus I’m excited for some beach time. And flip flops and shorts.  I haven’t worn my shorts since I left the states in October.  And I wore my flip flops outside the apartment twice in Yerevan, just quickly to take the trash out or something and got some awfully weird looks.  Boy do I love flip flops.

So with that, here comes round two, I’m incredibly excited, feeling a lot more confident arriving blind into a new country than I did with my Armenian arrival in October, and ready to help spreading the Kiva gospel in a brand new part of the world, and in a brand new kiva country for that matter to boot.

here goes KF10…….

the Sri Lankan flag. I'm a big fan of this flag

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[a quickie from the fellows blog]

By Brian Kelly, KF9, Armenia

After making several visits to various borrower communities in the rural villages throughout Armenia, I started to notice a familiar figure emerge.  Each village seemed to have a mayor.  Not a mayor in the traditional, sash-wearing, top-hat donning, political scandal-causing sense, but a mayor of microfinance.

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[Hijacked From the Fellows Blog]
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By Brian Kelly, KF9, Armenia

I have alluded to it several times in the past in some of my posts.  While maybe writing a sentence or mentioning a few words here or there, I think it deserves its own post because it’s turning out to be one of the central themes of what I have learned here about microfinance in Armenia.  The Human Factor.

Understanding your constituents is a vital part of doing business anywhere.  I think in microfinance this becomes especially important, specifically in regard to the customers.  Understanding their needs and capabilities is paramount.  While the good Samaritan in us may want to cater to a customer’s every desire, that usually isn’t the most prudent business decision.  This applies in microfinance, as many of the borrowers are applying for a loan for the first time, and may not have the instinctive financial literacy that privileged Westerners take for granted while growing up with allowances, to savings accounts, to that first credit card.  If you offered your clients whatever they wanted, they would probably take too many loans for too much money and likely be swimming in un-payable debt within a year’s time.  This isn’t any profound revelation, and it’s exactly the reason we have credit scores and screening of loan eligibility anywhere loans are made. (more…)

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