P2P-Banking.com

UPDATED: Kiva states in an email that this action returned 10 million US$ from partially repaid loans to lender accounts - available now for re-lending.

In the past Kiva used to credit repayments to the lender accounts only after a loan was repaid in full.

That changed last week when I received the following email from Kiva:

We are happy to announce that Kiva will now return repayments to lenders
as soon as those repayments are received by Kiva. Because of this
change, you’ll be able to re-lend funds right away instead of waiting
until the end of the loan term. We hope you enjoy this new feature!

As a result of this change, $231.44 in Kiva Credit has been released to
you and is now available for you to use. You can re-lend these funds,
donate or withdraw them.

(more…)

When I decided to withdraw some money from my Kiva account, I was informed:

This email confirms your withdrawal request of $25.00. You can expect the funds to be deposited into your paypal account within 1-3 weeks.

This astonished me. The withdrawal is conducted via paypal (as is the upload). The upload was almost instantly. Therefore I did not expect the withdrawal to take weeks.

BTW: So far my Kiva loans all pay on time.

Kiva did billboard advertising on highway 101. Apparently the ad was sponsored by Paypal.

Matt Flannery of Kiva speculates whether the board brings 125 additional visits per day to the website (0.04% conversion rate) or if user growth on the sampled weeks had other causes.

(Photo Source)

Credit card issuer Advanta entered into a partnership with Kiva. The initiative is called KivaB4BProject and Advanta will match the loans made by business card holders with up to 200 US$ per card. Card holders simply select a business owner to sponsor through Kiva and make a grant using their Advanta Business Card. Advanta matches that grant, dollar for dollar, and Kiva distributes the total resulting funds.

The loans funded by this project can be seen on this Kiva lender page. Already contributed to more than 500 loans.

When the project was announced at Advanta's headquarters, Advanta flew in Kiva borrower Senerita Lilli a dressmaker from Samoa to share her story. 

Kiva.org, which allows everybody to help funding microloans to entrepreneurs in developing countries, will achieve the milestone of 25 million US$ loan volumn within the next two days.

Launched 2005 the amazing growth curve can be seen on this Kiva stats page. The growth accelerated in 2007 driven by major media coverage. Up to now more then 260,000 individual lenders have funded more than 37,000 loans in 42 countries.
The current default rate is only 0.11%. While Kiva lenders do not receive interest, borrowers pay interest to the local Kiva Field partners (microfinance institutions).

Kiva, founded by Matt and Jessica Flannery (picture), is  a non-profit which currently has 16 employees paid by optional 10% lenders can donate on top of loans. Apart from them many volunteers aid the Kiva cause.

A February 2006 survey showed that Kiva donors were evenly distributed between 25 and 60. Slightly over half were males, and 65% made more than $50,000 a year. But a $25 cap on individual donations is causing the demographics to spread; more older, younger, and less-well-off people are signing up. Kiva has about 15,000 to 20,000 visitors a day coming to the site now.

While lenders may withdraw funds via Paypal upon repayment, 90% decide to reinvest the money into new loans.

(Picture courtesy Kiva.org)

The unrest after elections in Kenya might also to some degree impact operations of Kiva and MyC4 which are funding p2p loans in Kenya. As Jessica Jackley Flannery of Kiva reports operations of the local MFIs in Kenya have been interrupted:

The situation on the ground appears to vary widely from community to community. However, one consistent report is that business is not operating as usual; most MFI operations have been interrupted or stopped altogether in the last week, whether due to imminent danger in their region or the general disruption in daily life caused by turbulence elsewhere. Thankfully, as far as we know, none of our partner MFI staff have been hurt. Unfortunately, due to the magnitude of the situation, we anticipate that many entrepreneurs will have been displaced, hurt, or otherwise adversely affected.

Please be patient as this situation unfolds. We expect possible disruptions in our Kenya MFI partners’ operations as the staff on the ground recover.

On MyC4.com the local provider Growth Africa Capital writes from Nairobi, Kenya:

It probably hasn't escaped your attention that the Kenyan elections didn't go a smoothly as we had all hoped and has resulted in a lot of unrest, violence, destruction and even deaths.

As I type (noon, 2nd January) things are slowly getting back to normal in Nairobi. The situation is also improving in Mombasa, though we are yet to get the same good news from the central Rift Valley, Western and Nyanza provinces.

We should have a full overview in terms of the wether any of the opportunities funded via MyC4 has been affected by the unrest by Monday (7th January).

Once safe to do so, we will look at the areas in Nairobi affected by the unrest and wether affordable funding will make a difference in the affected people's lives in terms of re-establishing their businesses. So stay tuned for opportunities that will help get Kenya and its enterprising people back to normal - your investment may make a huge difference.

While the situation in Kenya is somewhat unclear, the crisis is already impacting Uganda's economy. MyC4 only recently started in Kenya. The majority of loans are to entrepreneurs in Uganda. 
Ronald Isabirye of the local provider in Kampala, Uganda about the consequences: (more…)

In an email newsletter Zopa Italy encouraged its member to spread the word about Zopa to friends and relatives. Zopa says it is for 'a good reason': Zopa Italy pledges to lend $1 on Kiva for each new member that registers at Zopa Italy before January 15th.
Everybody can monitor how much Zopa invested on this lender page at Kiva.

I am sure that Kiva will highly appreciate this promotion, a target audience that is already interested in p2p lending gets introduced to Kiva's concept. But I am not sure if that is a good marketing campaign for Zopa. Should the lenders decide Kiva is an interesting concept they might lend their money at Kiva instead of at Zopa. Maybe Zopa speculates lenders will invest in both. Or Zopa wants the added social angle to increase chances of press coverage.

What do you think? Discuss this at the Zopa forum. 

(Source: Email newsletter from Zopa Italy, Dec. 27th)

Kiva.org send a newsletter to lenders yesterday with current numbers:

• Over 16 million US$ in loans funded
• Average Kiva loan funds in 1.01 days
• More then 170,000 lenders
• 25,000 entrepreneurs received a loan

Kiva has grown a widespread group of supporters, ranging from Kiva Fellows over company supporters to a lively community discussing at Kiva Friends or contributing at Kivapedia.

KivaTV is showing a mix of promotional, educational and informational video clips.

Kiva still maintains a low default rate, which currently is 0.2%. The 20 Kiva loans I myself have invested in are all repaying on time.

Matt Flannery of Kiva.org describes in a blog post which obstacles Kiva has to overcome to make accounting not a too time consuming task for the local fireld partners (MFIs). With some MFIs having over thousand loans and slow internet connection Kiva needed to find a solution that saved time.

About a year ago, we realized that many of our Field Partners were having trouble doing so.  The sheer number of page loads was making it prohibitively difficult for a Field Partner to register repayments on time, even when the actual borrower collections in the field were happening like clockwork.  Thus, we introduced "exception-based" repayments.  The idea, used widely in MFI accounting systems already, is to have regularly scheduled payment registered automatically in a system unless the loan officer marks an exception — an event signaling that something went wrong and the borrower did not pay the full amount.  Since borrowers typically repay 95% (or so) of the time, loan officers only need to register something 5% of the time. 

Kiva's first whack at exception based payments was very crude.  The feature was written by me in late '06 in between blog entries and trying to keep the site up.  Many of our Field Partners adopted the feature out of necessity and it saved them a lot of time.  However, it was very difficult to mark an exception, so most of them never did.  Thus, many of our Field Partners never mark exceptions and just repay all of their loans on time, even in the 5% case where the borrower defaults.  This creates misleadingly high repayment stats on the site and we are working to correct that. 

Kiva plans to have group loans. The post does not describe in detail, how group loans will work, but I am looking forward to examine this feature:

In addition to that, we are rolling out a number of features to further reduce the work required by our Field Partners and increase transparency.   Group Loans will go live on the site this week.  This will allow Field Partners to post up groups of up to 50 on the site as an individual loan application on the site.  Group-lending is common practice in microfinance, but was not well supported by Kiva until now. 

Also Kiva will change how currency exchange risks are handled:

we will be introducing local currency support for all of our Field Partners.  This will allow the disbursement and repayment amounts on the site more closely mirror the actual accounting books of each MFI.  This creates more transparency around financial flows.  It also paves the way for a future reality where our partners will not need to bear currency risk.   Hard currency lending has fallen out of favor in the microfinance world and we hope to soon be on the cutting edge of local currency lending.

Note that on MyC4.com for most loans the borrower has to take the currency exchange risk. Loans with small amounts are paid out in local currency, while large loans are paid out in Euro.

Social lending service Kiva has refined its risk assessment for participating MRIs (microfinance institutions). The changes and the mechanism are described here. Risks for Kiva lenders include Entrepreneur Risk, Fieldpartner Risk and County Risk. 

So far the default rate for Kiva has been 0.17% on a loan volume of $9.965.000 (4.4% of loans are one month late). When compared to Prosper.com default rates, that is an extremly good result. So far the MRI on Kiva with the worst performance is REDC Bulgaria, followed by an MRI that organizes loans to people in Uganda, Kenya and Tanzania.

Another interesting figure: The average time a listing is online at Kiva.org until it is fully funded is 1.24 days.

So far all my Kiva loans are repaying on schedule.