Transcript Kiva Overview for MFIs Raising low cost capital over the internet More information: [email protected] "Revolutionising how donors and lenders in the US are connecting with.

Kiva Overview for MFIs
Raising low cost capital over the internet
More information:
[email protected]
"Revolutionising how donors and lenders in the US are
connecting with small entrepreneurs in developing
countries”
“Making microfinance easier...Kiva’s website is easy to use,
even for local Cambodian staff who haven’t used computers
that long”
Kiva Introduction:
What is Kiva?
Kiva is an online platform that connects MFIs to social investors
Social Investor
Online platform
MFI Partner
Entrepreneur
Kiva Introduction:
What are Kiva’s benefits?
Internet Lender
 Transparent (“I know where my money is going”)

Sustainable (“If repaid, I will re-lend to someone else”)

Affordable (“I only need $25 to change someone’s life”)

Unique (“I love microfinance and I want to participate”)
Microfinance Institution
 0% interest USD debt capital

No liability: Client loss borne by Internet Lender

Flexible repayment terms

Exhibit your work to an international audience
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Kiva in Year 1:
Kiva has received wide acclaim in the press and blogosphere
“Making microfinance easier...Kiva’s website is easy to use, even for
local Cambodian staff who haven’t used computers that long”
"Revolutionizing how donors and lenders in the US are
connecting with small entrepreneurs in developing countries”
"Kiva simply democratizes access to a worldwide microfinance
movement that has been empowering the working poor for two decades."
"Smaller investors can also make loans of as little as $25 to specific
individual entrepreneurs through Kiva."
"If you've got 25 bucks, a PC and a PayPal account, you've now
got the wherewithal to be an international financier."
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Early Results:
Solid early progress and strong “internet-style” growth
+13,500 internet lenders since Oct 2005 launch (avg loan per user = $75)
Total Capital Raised via Internet Lenders
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
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Early Results:
Strong base of supporters and advisors
Institutional Supporters
Free payment processing – eliminates Kiva’s variable costs
Funding field R&D – reducing MFI administrative costs
Free advertising and technology use – >$1M in value
“Kiva Kiosk” Pilot in Store – big potential over long term
Kiva featured invitee and speaker – honor for 1 yr old org
Advisory Board Members
Geoff Davis, President & CEO
Sam Daily Harris, Director
John Hatch, Founder
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Early Results:
Strong adoption with MFIs (now signing up 3 – 4 MFIs a month)
Since October launch, Kiva has expanded to MFIs in 17 countries.
Moldova
Bulgaria
Gaza
Mexico
Nicaragua
Honduras
Senegal
Ghana
Togo
Cambodia
Uganda
Nigeria
Ecuador
Kenya
Tanzania
Mozambique
Samoa
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List of current Kiva partners (Nov 2006)
1. Microfund - Togo
2. Ebony Foundation (E-BF) - Kenya
3. Hluvuku-Adsema- Mozambique
4. Mikrofond EAD- Bulgaria
5. Lift Above Poverty Foundation (LAPO)- Nigeria
6. Microinvest LLC- Moldova
7. Kraban Support Foundation- Ghana
8. Fundación para la Vivienda Progresiva (FVP)- Mexico
9. Admic Nacional- Mexico
10. South Pacific Business Development (SPBD)- Samoa
11. Adelante Foundation- Honduras
12. Women Initiative to Eradicate Poverty (WITEP)- Uganda
13. Youth Self Employment Foundation (YOSEFO)- Tanzania
14. Credit MFI- Cambodia
15. Life in Africa Foundation (LiA)- Uganda
16. Mifex Microfinance Exchange- Equador
17. Women’s Economic Empowerment Consort (WEEC)- Kenya
18. Prisma Microfinance- Honduras / Nicaragua
19. Senegal Ecovillage Network (GENSEN)- Senegal
20. Regional Economic Development Center (REDC)- Bulgaria
21. The Shurush Initiative- Gaza / West Bank
22. Village Enterprise Fund / Uganda
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MFI adoption of Kiva driven by cost savings
Factoring in staff administrative costs, Kiva’s capital is still 3 – 4x less expensive.
Cost of Capital Comparison
17%
15%
13%
11%
18%
10%
9%
10%
6%
10%
8%
4%
1-2%
2%
0%
WEEC - Kenya
Prisma – Honduras
Industry Average CREDIT (World Relief)
- Cambodia
Kiva
Total Cost of Kiva Capital =
[Financial Cost] + [Administrative
Cost] + [F/X risk] – [Write Off rate]
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Should your MFI consider partnering with Kiva?
Required Characteristics:
•
Average loan size > $100 USD
•
Cost of funds > 4% (in hard currency terms)
•
Number of clients > 500
Required Capabilities:
•
Ability to connect to the Internet
•
Ability to digitally photograph clients
•
Ability of one staff member to communicate by phone in English
– By writing, Spanish, French and Portuguese is supported
•
Ability to accept/manage currency risk of 0% interest USD loan
•
Ability to accept debt capital from foreign investors and repatriate funds
– i.e. no capital movement restrictions imposed by local government
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How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
MFI
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
Client
$
MFI approves client and disburses loan
– no change to MFI processes
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How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
Loan Application
Data
Digital Photo
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Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
Average time to
100% funding
= 2.2 days
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How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Kiva aggregates 0% interest USD loan capital
and wires it monthly to MFI
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Repay
ment:
Deduc
ted
from
new
loans
How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
1. During loan term, MFI only reports the exceptions
Repay
ment:
Deduc
ted
from
new
loans
2. End of loan term, impact summary required for each client
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How Kiva Works
Approve &
Disburse Loan
Post
client
data
on
Kiva
Receiv
e 0%
interes
t bulk
loan
from
Kiva
Intern
et
Lende
rs
“fund”
clients
Repor
ting:
Note
the
delinq
uencie
s+
final
impac
t
Repay
ment:
Deduc
ted
from
new
loans
MFI avoids wiring back repayments since Kiva automatically deducts the
amount owed from new loan originations each month.
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Interested in a pilot / learning more?
Contact:
[email protected]
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Appendix
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Current Landscape:
Microfinance supply not meeting demand
Microfinance Demand vs. Supply
1
MFIs by # of Borrowers Reached
# of MFIs worldwide = 3,300
2
Borrowers (millions)
600
500
500M
>100K
borrowers
2%
400
<2.5K
borrowers
73%
300
10K - 100K
borrowers
9%
200
100M
100
2.5K - 10K
borrowers
16%
0
Est. # of
borrowers
in need
Est. # of
borrowers
reached

3,300 Microfinance Institutions
(“MFIs”) reach 100M borrowers

Most MFIs are small (90% have
< 10k borrowers)

This meets only 20% of the
estimated demand

Reaching more borrowers
requires access to capital -- a
3
major growth constraint
1. CGAP, Microcredit Summit Campaign and UN Population Division data
2. Microcredit Summit Campaign data, 2006
3. CGAP and Microfinance Information Exchange survey of 191 MFIs ranked “Lack of funding” as the biggest constraint to growth, with biggest barrier to funding being “not
enough contact with social investors / donors”.
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Kiva’s solution:
Reduce MFI capital constraint enabling them to reach more borrowers
Until MFIs achieve a certain scale, capital is a major constraint to growth
# of
MFI
clients
Threshold scale
needed to access
commercial
institutional capital
Conservative
Institutional
Capital
Catalytic
Low Cost
Risk Capital
Time
Individuals can provide risk capital where commercial institutions won’t
•
Emotional return reduces need for risk adjusted financial return
•
No overhead cost structure to support (vs. bank) further reduces need for return
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A Vision: World’s Largest DB of Micro-Entrepreneurs
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