Kiva lending – a portfolio approach to giving
I love using Kiva. Its my favourite way of making charitable giving. Kiva lending allows me to control who I lend to much more directly than simply giving my money to a charity. This is the details of my current Kiva portfolio.
For those of you who don’t know what Kiva is, it’s a not for profit that aggregates various charities around the world that engage in micro-loans. I, as the lender, deposit money with Kiva and then select who I want to make loans to. Each profile sets out who the borrower is, repayment schedules and information about the lending organisation. While the borrower is charged interest on their loan, I make no returns on my money. Hence my “cost” is interest foregone. This is how Kiva makes money to pay its operations
A micro-loan is a very small loan made to people who could otherwise not access traditional financial services. For example woman in developing countries. It allows them to purchase, say, seed for crops which they can then on-sell at markets. The interesting thing about micro loans is that while they charge interest just like a normal loan, they have a much lower default rate than traditional lending. It works better than charity, as people are incentivised to repay a loan by working hard and building their businesses.
I take a portfolio approach to my Kiva lending. Like my stock portfolio, every month I review who I have lent money to, whether they are repaying on time and whether there is any updates.
Our current portfolio has dwindled a little bit over the past few months. Lots of loan repayments and not much in the way of new lending. That is going to change in 2019 as I will reinvigorate my lending efforts. At the moment, the repayment schedule of loans looks like this.
I made one new loan this month, to a woman in Mozambique. The loan will be used to purchase machinery for business.
Her story is set out below.
Eugenia is a 42-year-old Mozambican woman from Inhambane. She is married and lives with her husband and their three children in Matola, a District of Maputo Province.
Eugenia is a very simple and hardworking woman. She works hard to support her husband as well as to take care of their children. She also has a great heart as she is always willing to support other members of the community. Eugenia runs her own business producing crops such as maize, peanuts, and beans to sell in the local market.
Recently, Eugenia decided to invest a little bit more in her business considering the demand for seeds in her community. In partnership with her husband, they saved some money to buy a threshing machine to thresh seeds they had already produced to sell to local farmers and, thus, increase their income.
Eugenia could not save the necessary amount to buy the threshing machine so she is requesting a Kiva loan to make her dream of buying a threshing machine possible.
I try to make loans to a variety of causes and evenly split between men and woman. Outside the west, woman tend to get a rougher deal than men, so I feel its better to support them as far as possible. I also prefer to lend to people who have a business of some sort. Whether that’s agriculture or manufacturing, I don’t mind that much. Even education is a worthwhile cause, as it allows people to boost their income. What I don’t like lending for is personal consumption.