Gimmick – App for P2P Lenders

I just saw the first iPhone App that is to support lenders in using p2p lending services. It aims to help them keeping up to date with the latest listings at Prosper, Lending Club and Kiva.

The features of this app are rather basic, but with the number of people lending at p2p services there could be a market for a sophisticated app that really helps lenders select loans while on the move.

Update: There are in fact two other free apps to browse Kiva loan listings.

P2P Start-ups: Finding an Opportunity in the Midst of a Lingering Recession

The global recession or what has come to be known as the ‘great recession’ –in direct reference to the 1930s era Great Depression-has been with us unbelievably for the last 3 and a half years. It doesn’t seem like it does it? Many had predicted that it would turn out to be a ‘W’ or maybe a ‘U shaped or even a ‘double dip’ recovery by now, with most commentators assuming that we would most likely have seen its tail end with a year or two. Most- if not all of them- have been proved embarrassingly wrong! Countries such as the UK, US, Spain, Ireland, Hungary, Portugal –the list goes one and on and on and on- are still counting the cost of the recession in terms of lost jobs, productivity and in some cases, sovereign default! Recovery it seems, whatever alphabet sounds sexy, W or U shaped –is still yet to be seen in many cases.

Looking at the effects of the recession from the microfinance industry perspective however is what makes very interesting reading. Microfinance as such, is an industry that is curiously not correlated directly to the mainstream financial markets. Continue reading

Awe-Inspiring: Lender funded 23,079 Kiva Loans

Today, when I funded 2 more Kiva loans, I stumbled across the profile of Laurent D, from Belgium, who has funded 23,079 Kiva loans in the last 3 years. On his profile he states “I love the idea of helping people reach their financial independence”. Well said. And I bow to the dedication of making that many loans.

This got me wondering if there are lenders with even larger portfolio’s funded? There isn’t any information on this in the Kiva stats section.

Update: After using queries at Kivadata.org, it looks to me, that LaurentD actually is the lender, who did the most loans on Kiva, with Good Dogg, from the US, following second with 17,077 loans.

In Bed with the Enemy? Kiva and the Chevron Grant

100% of the money Kiva lenders loan goes to the borrowers via the MFIs. Kiva funds it’s operations by donations and grants. The list of corporate partners supporting Kiva is long and growing.

When Kiva announced that they received a 0.5 million US$ one-year grant from Chevron to assist with operational needs across the organization on the one hand that means that Kiva can continue to grow and pursue it’s vision.

On the other hand it did raise concerns with some lenders given the reputation of Chevron. The company is criticized of negligence of environmental risks on multiple accounts (example, example2 or see links in Wikipedia article). Many of the incidents occurred in countries where Kiva is now trying to help.

It’ easy to see why Chevron chose to assist the Kiva cause – it could improve their tarnished reputation and Kiva has a high visibility.

The issue is more on the Kiva side. Why did Kiva accept this grant from a very controversial sponsor? As hard as it must be to keep an organisation running solely on grants and donations – does the end always justify the means?

I am a fan of Kiva but I do have large doubts whether it was the right decision to accept this grant.

One lender in this discussion thread put it this way:

An organization that has human rights issues, donating to a group trying to empower humans.  Isn’t there something wrong with this picture?  What, is Chevron trying not to have nightmares when they put their head on their pillow at night, and Kiva is supposed to make them feel better maybe?  A good name for this partnership might be ‘sleeping with the enemy’ . . .

Peer-to-Peer Lending Headline Potpourri

Deutsche Bank Research released a new e-banking snapshot focusing on p2p lending. Notable trend is a shift to automated bidding (vs. manual selection of single loans). Interesting results are the findings that loans with longer loan descriptions have a higher default risk (at Lending Club) and that lower cost are not the only motivation for borrowers to use p2p lending services (offers by banks might actually be cheaper).

MYC4 is still struggling with the situation of it’s local provider Ebony in Kenia.  After some issues raised questions, MYC4 attempted to investigate Ebony’s portfolio. However when MYC4 attempted to perform an announced audit at Ebony’s premises in Nakuru accompanied by 4 auditors of KPMG, they were denied access. MYC4 filed an application in court in order to get access to the files. However on October 30th the court postponed the case until December.
Kiva had paused Ebony last year after unsatisfactory results and defaulted all Ebony loans last month.

In Germany p2p lending usually received positive to enthusiastic press coverage in the past. Today’s article in Handelsblatt (a financial newspaper) online edition has a more critical tone, pointing at fee structures of one service and wondering why the German Bafin (the regulation authority) sees no need to monitor activities of p2p lending companies more closely. The article does also cite positive recommendations of consumer advocates for Smava.

The New York Times picks up the story of an earlier blog post by David Rodman (‘Kiva is not quite what it seems‘) that started a discussion on transparency and marketing messages of Kiva around the question if Kiva lenders are really aware that they do not lend to the entrepreneur pictured but rather to the MFI which may/will use the money to fund other loans.
Since the blog post Kiva has changed it’s tagline on the homepage from “Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty.” to “Kiva connects people through lending to alleviate poverty.

Kiva Loans Surpass 100,000,000 USD

Congratulations to Kiva. They have tackled another impressive milestone: more then 100 million US$ total loans funded since inception. And the growth curve is pointing straight upwards. 60 million US$ were funded in the last 12 months.

Quoting today’s numbers from Kiva’s statistics page:

Total value of all loans made through Kiva: $100,223,910
Number of Kiva Lenders: 585,070
Number of countries represented by Kiva Lenders: 185
Number of entrepreneurs that have received a loan through Kiva: 249,619
Number of loans that have been funded through Kiva: 142,801
Percentage of Kiva loans which have been made to women entrepreneurs: 82.72%
Number of Kiva Field Partners (microfinance institutions Kiva partners with): 106
Number of countries Kiva Field Partners are located in: 49
Current repayment rate (all partners): 97.88%
Average loan size (This is the average amount loaned to an individual Kiva Entrepreneur. Some loans – group loans – are divided between a group of borrowers.): $404.87
Average total amount loaned per Kiva Lender (includes reloaned funds): $171.34
Average number of loans per Kiva Lender: 4.91

Will Kiva run out of goals now? Definitly not:

But we believe this is only the beginning . . .

Kiva is about dreaming big. The entrepreneurs on the website dream about big business; our Field Partners dream about financially including all of the poor; Kiva Lenders dream about ending poverty.

Kiva was a big dream before the idea of lending to someone on the other side of the world became a reality. Now we have big dreams about making Kiva the world’s hub for alleviating poverty.

This is a quote from a Kiva blogpost from October, which also give the strategic goals for the next 5 years:

  1. Raise 1,000 million US$ in loans over the internet
  2. Reach 2 million entrepreneurs around the world
  3. Realize our own self-sufficiency in the process.

Kiva has my support. Let me know, if I can do anything to win your support for Kiva.

Kiva Conference Call Notes

Live from the Kiva Conference Call:

  • Defaults: FSME and Health Africa ceased to exist. Ebony Foundation loans were defaulted because Ebony failed to repay
  • There are payment problems with 2 providers
  • Eastern Europe portfolios are hard hit by economic downturn. 3 partners are problematic
  • Future plans for research project on alternative ways to display loans on the site (e.g. dashboard) – see related ‘popularity issue‘ discussion here
  • MFIs are working on updates on the impacts of recent Tsunamis (Samoa, Philippines) – will come in the next weeks.
  • Q&A touched transparency – one question was how much can be revealed on the homepage and how much needs to be one click away on the help page (e.g. descriptions on processes like net billing)