James Sapara’s Personal Blog

Seems like people are upset about Kiva providing micro financing to Americans. I guess all American’s got a bad rap sheet because of that hold botched financial crisis thing. Sure, you could generalize all American’s as if they’re all a bunch of imbecels when it comes to money; but, I don’t think that’s very fair. Lots of America’s do know how to save, invest and plan. That’s what Kiva is all about people!

• http://kivanews.blogspot.com/2009/06/letter-from-kiva-about-pilot.html
• http://www.kivafriends.org/index.php/topic,3922.0.html

The whole idea of micro loan’s is that the lender and receiver have a more personal relationship. I know I’m borrowing $100 to Mr. Business owner, he fixes motorbikes. Plan’s to repay his loan over 8 months. You also know about your broker. How much volume they’ve been doing, their repayment rate, their default rate, etc. The system is setup to reward due diligence on part of the broker. It motivates the receiver to pay back, because of the personal nature of the loan. Last but not least, you get to decide for yourself if it’s a person/business/idea/broker that you want to support.

The thing everyone has to remember is that if Kiva fails in America, people will just stop loaning to American’s because of the represented risk. No one in their right mind would loan through a broker who didn’t have an acceptable repayment rate and a very low default rate. This applies to all brokers with Kiva, not just the American brokers.

What I think is more amazing about Kiva is that you and spread your risk around. Given the rate of defaults in general, your chances of losing $25 is very low. From what I’ve been able to observe, most default’s get partial payments anyways… so even then your chance of a complete loss of investment is low.

Really, the only criticism I can throw at Kiva is that it’s a 0% return on investment. Really, I figure it’s more like donating to charity, but you get to keep donating the same set of money over and over again. Doing many times the initial value of good with the same money. I’ve already reinvested $65 since I started. With $125 in the pot at the time. That’s 50% ROI if you look at it as charity.