As many of you Kiva lenders have noticed, Kiva recently upgraded the administration system that Field Partners use to post businesses and report repayments. The partner administration system, aka PA2, is where Field Partners post businesses onto Kiva and report on the status of each loan. This was a major redesign of the site and it has brought a bunch of great new features that benefit both lenders and Field Partners. For those of you who haven’t been reading all of my posts (shame on you!) I am a fellow at AMK and HKL, and I’ve also been working closely with the other two Cambodian MFIs, CREDIT and Maxima, to help them with the transition to PA2. Having been a fellow in a PA1 world and now getting to see PA2 for awhile firsthand, I wanted to give you lenders some perspective of PA2 from the field!
- Now, Field Partners, aka Microfinance Institutions (MFIs), report the exact repayment schedule for each Kiva loan – Previously it was just assumed that loans were on a monthly schedule. In the new system, MFIs can report the exact dates of when a loan payment is expected. This lets MFIs post loans on all types of schedules such as end-of-term, weekly, bi-weekly, etc. If the MFI wanted to set a schedule in which the borrower pays back the loan only on the days when Saturn and Uranus are in alignment, this can now be done on Kiva! Unfortunately, none of the members of the Astrological Microfinance Association have joined Kiva yet…
- MFIs now report the exact status of each loan every month – Every month each MFI uploads a list of the total principal paid for each Kiva loan. This is great for Kiva and Kiva lenders because it can help them get a better sense of what exactly is happening on the ground and identify any loans and/or MFIs that are having a hard time paying back loans. Even though you’re thousands of miles away, you’ll actually know how the borrower is handling the repayment process. If a borrower makes on time payments or an early payment, then you know everything is okay. If a borrower misses a payment, then you know that they might be having problems. The change has been great for MFIs as well. For example, at AMK we do a mix of monthly loans and end-of-term loans. We use to report the status our end-of-term loans manually, but that was a lot of work which took a lot of time. I made a Microsoft Access application for AMK called the Kiva Loan Tracker which can report the exact status of all the Kiva loans onto a CSV file. In PA2 we can just upload that CSV file and our work is all done in just a few minutes! Sweet.
- MFIs Repay Kiva Lenders When the Borrower Makes a Repayment - The MFI repays Kiva when the borrower makes a payment. This helps MFIs because now they do not have to repay Kiva lenders on a different schedule than the loan terms. This is important because it prevents creating liquidity/cash flow issues for MFIs, which is a serious problem for many of the smaller MFIs. This is also great for Kiva lenders because if a loan receives an early payment then the Kiva lender gets repaid early also. This happens quite often at AMK, especially with many of the end-of-term loans. I’ve noticed many AMK loans being repaid months early.
- The Actual Disbursement Date is Posted – In PA1, the MFI would post a disbursement date on Kiva, which was more of an acknowledgment that the loan has been disbursed and that its status will be reported to Kiva. In PA2 the actual date that the loan was disbursed is reported to Kiva. Many MFIs post loans on Kiva that have already been disbursed. They do this because for them it is the only way to incorporate Kiva into their operations. Many MFIs front the money for these loans, hoping that they will get funded on Kiva. At AMK a loan description is written by the client officer when a client applies for a loan and then the picture is taken at the loan disbursement by the Area Manager. This information is then sent to the head office in Phnom Penh by taxi. This prevents AMK staff from having do to an extra visit to the client, which would be a waste of resources. The last thing Kiva wants to do is to be a burden on the MFI, which could inadvertently increase interest rates.
- Google Gears – The Kiva engineers incorporated google gears into PA2. This is EXTREMELY helpful for MFIs, because many of them have VERY unreliable internet connections. When I arrived in Cambodia, the internet at my MFI was down for almost a week. This was a very painful experience if I was posting a business, because if the internet went out in the middle of a business posting, we would have to start all over once the internet came back on. In PA2, if the internet goes out, a draft is stored which you can then return to at a later time. As I’m writing this, the internet just went out and Chan Ry, the HKL Kiva coordinator, was in the middle of posting a business. Now he doesn’t have to start that post from scratch! Hurrah! Google Gears also stores part of PA2 on the computer of the MFI which lets the site load quicker. If you guys can remember the days of dial-up modems, then you’ll know how slowly webpages load at some of the MFIs (that’s if they load…)
- We Can See Your Comments – PA2 has a page where we can see all the comments from lenders. This is helpful because it makes it easier for Field Partners to respond to your comments.
- Separate Server – Occasionally Kiva lenders get really excited and bombard the Kiva website looking for loans that they can lend to. Once in a while, this causes the Kiva webservers to crash. In the past, when this would happen MFIs wouldn’t be able to post new loans. Now PA2 is stored on a separate server, so if Oprah decides to share her love for Kiva on national television again, MFIs can keep on posting.
- Increased Transparency – I’ve been helping all four Cambodian MFIs make the switch to PA2 and I’ve realized that PA2 has created a much greater sense of transparency. The four Cambodian MFIs are not committing any fraud. I can state this for a fact because each MFI gave me access to their data. The more real information Field Partners send Kiva, the easier it will become for Kiva to spot any signs of trouble or fraud. In PA2, Field Partners also report the exact account number for each loan, so when Kiva does an audit of a Field Partner it will be easier to spot any signs of trouble. My Loan Tracker makes sure that information is accurate by taking the exact data from their Management Information System, so when a business is posted the names and account numbers are exactly the same on Kiva as they are in the MIS of the MFI. In the past we had hard times finding information on some Kiva loans, because the names were translated slightly differently.
Some Kiva lenders have been asking Kiva why MFIs cannot send repayments on a weekly basis, so that they could get their repayments quicker. One lender even compared the new system to sports announcers from the 1930s who called away games on the radio using tickertape. The truth is microfinance, at least in Cambodia, works at a pace similar to tickertape. Here at AMK, the central office receives data from the branches at the end of the month. At HKL, the branches send data to the main office every two months. The reason is that these MFIs do not currently have the necessary infrastructure to receive real time data. At HKL the data is put on a CD and sent to the main office by taxi. Real-time Kiva updates would be great but it is not feasible (at least not yet). Kiva and the MFIs are the doing the best they can given the circumstances. Until the network infrastructures of these MFIs is improved (which will hopefully happen in the coming years) there will always be a lag between the date of transaction and when it is reported to the lender. But as the infrastructures of the countries that Field Partners operate in improves, Kiva can start asking for more information quicker.
Because this new system is requiring MFIs to report information quicker than they normally do for Kiva and for their own operations, PA2 could become a burden for some MFIs. The last thing Kiva wants to do is hurt the efficiency of the operations of any of its Field Partners. This is why Kiva gives MFIs a 15-day grace period for when they upload the status of each loan at the end of each month. I’m currently working at two Field Partners, AMK and HKL (I just started at HKL). AMK has a network that allows me to connect to the servers at each of the branches and download the data for each loan. My Loan Tracker works very well there. At HKL they don’t have a network like that. We’re working around that by getting branches and sub-branches to send their data through Windows Messenger. Getting the data from the sub-branches with unstable internet connections has proved rather difficult and for those we may have to rely on receiving the data by CD, which can take weeks. This must be even harder for MFIs where the internet is worse.
PA2 has come a long way in the last few months. I’ve been testing it out since August and PA2 is much more stable now that it was a few months ago. The Kiva engineers should really be commended for their hard work in getting this up and running. Though there are still a few bugs, I’m sure the Kiva exterminators engineers will get rid of them in no time. Also, once MFIs get use to the new posting process many of the errors in the payment schedules will disappear.