Tag Archives: microloans

The International Bank of Stern

I honestly forget who introduced me to Kiva — maybe my former co-worker Dr Jim, definitely one of the more socially minded people at Sun Microsystems in the pre-Oracle days. I just made my 140th Kiva loan, bringing my total notional amount to just shy of $4,000. With a 2017 resolution to do more social good and build bridges, I made a small donation to Kiva and topped off my account so that I was able to fund seven new loans today, primarily using the balance from previous repayments over the last six months.

Some interesting statistics, most taken from my private page, a few from my public lender profile:

  • Loans made: 140. Under 2% of them have run into payment delinquency, and less than 0.7% have defaulted.
  • Total amount loaned: $3,990 (this includes re-loaning funds that have been repaid). I’ve benefitted from six different promotions, and over the course of eight years as Kiva lender I’ve re-loaned each dollar about twelve times. That is a remarkably efficient velocity of money given the frequently retrograde payment, disbursement and records keeping mechanisms in play.
  • I’ve invited 26 people to Kiva and they have made an aggregate of 199 loans. More than half of the total I’ve invested in Kiva ($475 of the $770) has been in the form of gift cards – one of my favorite gifts to give for someone who has everything including elegance in giving their time and energy.
  • Of the $295 out of pocket I’ve invested in Kiva, about $25 has gone to currency loss and $25 to default. At about 0.7% each, those rates are less tha one-third of what you pay in credit card currency translation or the national average credit card default rate. In short, banking the unbanked is better business.
  • Demographics: 35 countries, 16 sectors, 64 field partners and 68% of loans to women. That’s what empowerment looks like – helping women start and grow their own businesses, with local partners interested in job creation and economic expansion rather than fees and interest rates.
  • If you’re wondering about that “International Bank” bit, it’s liberated from The International Bank of Bob: Connecting Our Worlds One $25 Kiva Loan at a Time which is an amazing introduction to the world of unbanked populations, microloans, and social impact.

    In this last batch of loans, I made sure I included a country in which I’d never made a loan before (Congo and Peru), and a segment I hadn’t funded (arts). Of course, I also made a few new loans in Rwanda, where I’ve seen excellent performance of the portfolio and have had a personal interest since our daughter spent a month in the hills teaching English. My investment strategy is simple: I am for loans that are under 12 months in duration (because it allows me to turn the funds over, and because I believe that limits the dynamic range of delinquency events). Look for field partners who have experience, low default rates, low currency risk, and make an about-market return on their funds (so they aren’t taking advantage of their local customers, but aren’t in the money losing business).

    High notional volume, low return, multi-party mutual funding — it’s the model that grew the American insurance businesses through the 1950s, and now it can grow small scale business opportunity. If you grew up in the Tri-State Area and remember Phil Rizzuto pitching for the Money Store, it’s that idea taken globally.