Observing Kiva’s Raison d’Etre in my First Field Visit

By Claire Markham, KF16, Kenya

On Kiva’s website, the description of why Kiva does what it does is as follows:

We envision a world where all people – even in the most remote areas of the globe – hold the power to create opportunity for themselves and others.

We believe providing safe, affordable access to capital to those in need helps people create better lives for themselves and their families.

Last Thursday, I had the opportunity to spend a day with a loan officer with SMEP’s Nairobi Central branch, and we traveled to three different Kiva borrower groups at various stages of the savings/loan process with SMEP. Though these were fairly routine visits for the loan officer, they were far from ordinary from my perspective. My experience with meeting these borrower groups enabled me to see first hand how Kiva’s raison d’etre actually plays out in real life.

A Kiva borrower with his vegetable stand in Nairobi

Loans provide empowerment

We envision a world where all people – even in the most remote areas of the globe – hold the power to create opportunity for themselves and others.

The word that jumps out to me the most in this vision is power. My experiences from the day in the field have shown me that borrowers benefit not only from the financial aspect of having a loan, but from the pride and empowerment that comes as a result. In the borrower meetings, all of the clients were treated like capable, responsible individuals, regardless of their level of income or how well they were doing with their savings. Because they are trusted with financial concepts and treated as business partners, it was very clear the sense of power that each borrower that I met felt.

After the first group meeting, a few of the borrowers were showing me around so that I could see their businesses. There was one man who operated a small vegetable stand but he also had a small glass heating device that was used to store French fries so that they would stay warm and he could sell them. He was able to purchase this fry machine with his Kiva loan. I took a picture of him in front of his vegetable stand but then he insisted that I take his picture in front of the fry machine as well. He was evidently so proud of it, and I found it really heart-warming to see his satisfaction and delight because of the investment that he was able to afford with Kiva and SMEP’s help. He wasn’t given this fry machine as an act of charity; he had the power to create the opportunity for himself because he was the one who had the idea to purchase the machine, and he diligently saved month after month until the loan was available to him. That power that he feels knowing that he wasn’t just handed this opportunity is what I saw to be reason he had such great pride in his investment.

A Kiva borrower with his french fry machine in Nairobi

Loans give hope for the future

We believe providing safe, affordable access to capital to those in need helps people create better lives for themselves and their families.

I believe that the fundamental steps in being able to create a better life for the borrower and their family are having goals for how a better life can be achieved, and having hope that these goals are achievable. From what I saw at the borrower meetings, microfinance loans give hope for the future.

All of the groups of borrowers that I met have goals are attainable. In borrower profiles, none of the clients state that their goal is to become an international sports gold medalist or prime minister of the country; their goals are as simple as to provide education for their children, or to eventually open a wholesale business. These goals are realistic as long as the borrower is motivated, saves and makes regular loan payments.

Though the clients may have had these goals before they became a SMEP client, I believe the savings and loan process has two effects:

1) It enables them to develop longer-term goals than they otherwise may have been able to

2) Access to capital increases the likelihood that the goals will be achieved

The first group of borrowers that I visited had the intention of taking out loans for water tanks once their business loans are paid off because their village does not have a source of clean water. Though this may have been a goal of the borrowers even without SMEP and Kiva’s assistance, this goal would take a much longer time period to be reasonably achieved without safe and affordable access to capital.

In the first borrower meeting, one of the clients was required to exit from the group. It was for a valid reason because she lied to SMEP about her identity and her business. She had not yet received a loan as she was still in the savings mode, but she was required to withdraw all of her savings and could no longer attend group meetings. She was devastated that she would no longer have the possibility of a loan in the future and no longer be able to share in the feeling of community associated with group membership. Though this was not a particularly pleasant occurrence to witness, the devastation that she displayed demonstrated that she was losing something very important to her. This truly emphasized to me how significant the role of microfinance plays in each of these clients’ lives.

The sewing business of a Kiva borrower in Nairobi

Kiva’s personal touch

The sense of empowerment and the hope for the future that are provided by microfinance loans are common to most microfinance providers that have their clients’ best interests in mind. However, I noticed something special that Kiva brings that goes above and beyond these two benefits previously noted: personal touch. I recognize that Kiva’s processes can be cumbersome at times for some MFIs, and I had imagined that of all people, loan officers might have the hardest time adapting to Kiva’s model as it is additional work for them.

However, I heard an interesting perspective from the loan officer I traveled with. When I asked her what she thought of Kiva, she said she enjoys the personal elements that Kiva adds to the transaction. She likes to get to know her customers as part of her job, and thinks that should be something all loan officers strive to do regardless of whether the loan is funded through Kiva. Throughout the day, we met approximately 50 borrowers and she knew all of her clients’ names. She told me that she does not think following Kiva processes adds that much time because all she is doing is documenting information that she would like to receive from customers anyways as part of her job.

I understand that this may not be the perspective of all loan officers, but I think that Kiva’s processes enforce a minimum degree of personal interaction to take place between the loan officers and the client, which is how I believe business should be conducted no matter what the circumstance. Though I have no evidence to back this up, I suspect that a client would be more likely to act appropriately with the loan proceeds and make the repayments (within their control) if they are working with a loan officer that they know and respect rather than a loan officer whose only interaction with the borrower is collecting repayments. I also think that the benefits of a positive personal relationship between the loan office and the borrower transcends much further than between the two parties; it can create a strong positive image for Kiva, SMEP, and the microfinance industry.

Claire Markham is part of KF16, serving with SMEP Deposit Taking Microfinance Limited (SMEP) in Nairobi, Kenya. To lend to SMEP’s borrowers, become part of the SMEP lending team.

About the author

Claire Markham

As Portfolio Manager for Anglophone Africa, Claire is responsible for managing partnerships with existing Field Partners and growing Kiva’s presence in the region through due diligence on potential partners. Based in Nairobi, Kenya, Claire began working at Kiva in 2012. Prior to joining Kiva, Claire worked as a Senior Associate with KPMG’s Global Infrastructure Advisory Group in Toronto where she advised public sector clients on infrastructure financing. She obtained a Bachelor of Business Administration from Wilfrid Laurier University, and she holds the Chartered Financial Analyst (CFA) designation.  She discovered her love for African travel during her first trip to Tanzania in 2005 and has since then made it her mission to drink all the Stoney Tangawizi she can find.