You’ll recall how Kiva is a microfinance outfit offering loans to people in developing countries and how I’ve bigged them up a couple of times already. So far I’ve loaned to Rosaura Tuñoque Santisteban’s general store in Peru, the Santa Lucia Group’s clothing business in Nicaragua, the Kunthea Hun Village Bank Group’s vegetable plot in Cambodia, Malikie Kanu’s food store in Sierra Leone, Luka Ngoti Hahunyu’s car repair place in Kenya and Rose’s egg, water and milk shop in Rwanda, and felt pretty good about my noble self doing it. The loans have all been returned to me now, like a boomerang of justice flung by an aborigine of morality round a kangaroo of reversible poverty, in a metaphor so strained it’s got a hefty case of haemorrhoids. Point is, I’ve got money waiting to go back out into the world and do good.
That’s about where the wobble kicked in. After that last rant about payday lenders being arseholes the worries I’ve had about microfinance went from being vague floaty things at the back of my mind to being slightly less vague, marginally firmer things on a list of other things to consider thinking about at some point in time when I can be bothered. There are two worries at work here: the interest people are expected to pay, and whether the loans actually do any long-term, world-improving, future-fixing good.
Like the likes of Wonga, the fees and interest on these things can be fairly hefty. Kiva reckons high interest is in the bones of microfinance, that it’s needed to cover the costs of making small loans. There’s a degree of sense in that, and a spot of maths that adds up to something halfway convincing. Kiva says sorting a loan of $100 costs about the same as a loan of $500 but the transactional costs come off as disproportionate for the hundred bucks. A hypothetical $30 charge would show as 6 percent for the $500 borrower but 30 percent for the $100 borrower.
Thing is, the examples Kiva gives are only hypothetical and then vague on top of that, making them less transparent than the arseholes I was banging on about last week. I can’t find how much people actually pay back for the money they borrow. Dig into repayment schedules, they only total the amount loaned with no mention of the interest. This matters. If Kiva and the Wonga-likes have the same basic business model it feels like a cheat to say one’s a big hearted doer of good and the other’s a lousy, exploitative bag of bastards. And adding to this you’ve got Wonga supporting Kiva, slapping the logo on its website like they’re arseholes in a pod. Serenity now!
The closest I can get to resolving the interest thing is going through CARE International which does its own microfinance via Lend With Care. It says affiliated Microfinance Institutions (MFIs) typically charge between 20 percent and 30 percent interest which, if true of Kiva’s MFIs, would make their hypothetical 30 percent at least less hypothetical if no less vague. And if we’re talking highs of 30 percent we’re far enough from Wonga’s trillion percent to relax a little about the interest.
Next up is the worry about whether the loans actually do any good. Here we wade into economic and development theory so complicated it makes my bumhole sting. Some say it’s cool, others say it’s not. I’ve simplified their positions slightly. That aside there’s basic logic that says if someone’s getting a loan to buy stock for their shop, and that shop’s not new, and they’re not looking to expand but just to fill shelves, then the shop’s not making the money it should and maybe a loan won’t help that much. But, again, there’s not much in the way of detail so maybe these are always new businesses or always businesses looking to expand.
Maybe it comes down to trust. I’m not a fan of that kind of thing, not since I lent that hobo my car so he could take his sick dog to its audition at the circus, their own car having been stolen by a friend of Douglas Hurd. They said they’d only need it for an afternoon. It’s been twelve years. But I trust CARE International and Kiva gets top marks from Charity Navigator, so maybe trust will have to do.
As for Kiva’s affiliation with Wonga, I’m willing to write that off as just the kind of bad-taste blowjob charities have to give corporations to stay funded and Kiva’s not unique in that. The charity I used to work for once took money from Nestlé in a corporate blowie so distasteful I downed two bottles of Listerine and still had an aftertaste of dead babies.
Main thing is there’s only about 90 minutes of October left and I need my bed. By which I mean congratulations to Kiva, the official, undisputed Chazza of the Month.