Can Kiva cope with the demand ?

As per my previous post it looks like Kiva is having some troubles in coping with demand.  This article confirms their plan to launch micro loans in the U.S.

In some recent enquiries I have discovered that some MFIs are not entirely pleased with Kiva’s system. Why so if the money is lent at 0% interest rate?

The MFI is still responsible for repayment charges (that, for small monthly repayments can add up) and find the requirements to keep a borrowers journal resource-intensive. The exchange risk is also entirely on the partner shoulders and this, in certain countries, is a real issue.

Interestingly the journal updates do contribute to the lender “feel good” but isn’t of any help to the borrower. Additionally, Kiva has a limit of 1200$ per borrower and, in some emerging economies, borrowers might need higher amounts.

Personally I was very surprised to hear that some MFI were not very happy about the Kiva model. What was particularly interesting was seeing how cumberstone could the frequent updates and regular payments be.  Apparently some MFI would rather pay interests but enjoy more freedom in operating the loans and serving them to their clients without too many restrictions. Another thing I don’t particularly like about Kiva is that the majority of the loans have been disboursed already. In the case of myc4 the loan is disboursed only after all the bids have been collected and the money effectively delivered.

After reading this post I am getting concerned about myc4 too. Some projects make no sense: 3 aspiring DJ’s (!!) in Kenya were asking for a 12,000 Euro loan each. The pictures look very similar – taken at the same place. Similarly, other projects like this and this do have similar pictures and a somehow dubious amount: 10,000+ Euro. This might not really fit within microcredit. Even in developed countries in the EU a credit of 10,000 Euro is not given that lightly. If you add the currency risk to this you do get the picture.

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