I won’t even try to extract the highlights as the whole article is a fascinating read.
Tomorrow Kiva will announce that it will start to fund loans to borrowers in the United States. Kiva, which so far lets anyone support loans to small entrepreneurs in developing countries, is reacting to lender suggestions who wanted to use Kiva to help borrowers in need in the US.
In the US Kiva will partner with Accion USA and Opportunity Fund to select eligible borrowers. Initially the small business owners borrowing will be from the areas of Atlanta, Boston, Miami, New York and San Francisco. Continue reading
I am blogging this live while listening to the Kiva conference call. Kiva plans a loan matching program, where lenders and institutions can opt to automatically match loans made by other lenders.
Some statements/explanations from the conference call:
- Today 6 or 7 people out of 100 that visit the Kiva website actually make a loan (conversion rate)
- Lenders can select to match any loan, or select loans by criteria
- Lenders can opt to match immediately or only if they have periods of inactivity
- Minimum account balance allows to reserve some money in the account (only balance over this minimum is used for matching)
- Donations to the Kiva organisation are mandatory(!) when using the matching feature
Kiva says the new feature allows to automate the lending process and hopes that it inspires others to lend more.
The matching program will probably be launched in summer 2009.
On terms of automation there are similarities to the autobid feature MYC4 has.
See the following presentation for more details on the plans.
In today’s conference call, Kiva explained plans to reduce currency risks for the local MFIs by having lenders absorb losses, if currency depreciation is higher then a threshold x% (with x% yet to be defined).
Currently currency risk for loans issued in local currency is fully taken by local MFIs of Kiva. In future MFIs can select for new loans, if they want to keep it that way, or if a new stop-loss rule shall apply.
The details are explained in this presentation:
Slide 14 shows how many of the loans would be affected, if the stop loss rule would have applied in 2008/ in the last 5 years.
One question in the Q&A of the conference call was, why currency risk came up just now after years of operation of Kiva and the answer was that the problem is now more pressing with the recent appreciation of the US dollar.
Another question was, if a possible solution would be that Kiva just would supply the hard currency as collateral to a local bank in the country which would then issue the loan in local currency. The answer was that this would be impractical, because in case the local currency appreciates then the bank would demand a raise in the collateral, which could not be handled as neither Kiva has the funds nor could the lenders on the loans affected be expected to make an additional payment for this.
It will be interesting to see, if some MFIs stick to the current mode and upload loans with no currency risk sharing to the platform.
On MYC4 lenders take currency risk in full but earn interest.
This is a great example how many people can be reached over the internet with a well made video in a short time. Online since only 8 days the video has been watched over 32,000 times and was embedded in many websites (at least 50).