Archive for the ‘ Opinion ’ Category

In Defense of "High" MFI Interest Rates

Re-posted from the Kiva Fellows Blog.

Having read Meg’s excellent blog post “Bad Roads, Interest Rates, and MFI Sustainability” and the ensuing comments from Kiva lenders, I admit that I was rather baffled. Particularly by comments that varied upon the theme of: “In the U.S. you can get loans for ~8%! You can get credit for 18% interest, which we find high and oppressive! So how can MFIs charge 36% interest rates on loans to their poor clients, it is usurious, it can’t be justified…” so on and so forth.

I believe that if you were to plunk a U.S. bank into a developing country with limited infrastructure, where most clients don’t have ready access to the internet that lets them transfer money from one bank account to another with the click of a mouse, where you have to ask employees to constantly risk their personal safety by carrying huge amounts of cash over uncertain roads and territories, those banks would not be charging 8% interest or even 18% interest, but a much, much higher rate.

Still not convinced? Let’s try a quick breakdown of some actual numbers –

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Does Microfinance Really Work?

If you follow me via @Anecdoted on Twitter, you’ll notice that I share quite a few articles criticizing microfinance, far more than ones that praise. Despite this evidence to the contrary, I do believe that microfinance “works” – but not in the “silver bullet” transformative way that most people often associate with microfinance and poverty alleviation.

As a Kiva Fellow, I’ve seen the successes. I’ve visited businesses and interviewed clients who have succeeded because of microfinance. These borrowers were able to grow their businesses that not only provide the owners with a comfortable living, but also provide additional livelihoods for hired employees. Abhijit Vinayak Banerjee and Esther Duflo of M.I.T, and Dean Karlan of Yale wrote in their New York Times op-ed “The Role of Microfinance,” microcredit is generally viewed as either “transformative” successes, or “ruinous” failures. Having seen the former, I believe that much of the latter is caused by over-high expectations – that poor people all over the world would be lifted out of poverty through lending. When recent research failed to support this concept of global poverty alleviation, people started to lose faith in microfinance.

HSPFI-Camiguin Borrowers

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It's Harder to Be Christian During Christmas in the States?

Ok, I admit that I mainly wanted to practice writing a “catchy” title for this post. I’m sure that people who know me are thinking something along the lines of “but you’re not even Christian!” And I’m not in the U.S. right now either. But I did just read a fantastic TIME article about how Christian church groups are standing up against the insane commercialization of Christmas in the States, offering some proof that this title might not be as outrageous as it appeared at first glance.

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Kiva Fellow Motivation Statement

I want to become a Kiva Fellow because I’m extremely interested in social entrepreneurship – which I’ve studied about in college and have continued to follow through news articles and releases from nonprofit organizations like Ashoka. I believe that microfinance is a powerful means for entrepreneurs to better their lives and the world, and I hope to learn more about microfinance on the ground, not just in theory but in person and in practice.

On a slightly more personal note, right now seems like a good time in my life to try something slightly off the beaten path. At Brown University I was an international relations concentrator with a focus on development studies – very much prompted by my background as a Taiwanese diplomat’s daughter. Growing up I’ve lived in the U.S., Taiwan, Israel, and for a short period in Malawi. However, living with my parents I often felt like I was restricted to the bubble of the international community. Also being much younger then, I didn’t really appreciate the constantly moving lifestyle that being part of a diplomat’s family demanded. I did however grow up with a healthy appreciation and respect of different cultures and the challenges that often come with the clashing of cultures.

Going to Brown University helped further my social awareness. I received a grant to work with a local nonprofit organization called PrYSM the summer of 2005. That ended up being one of the richest yet most emotionally grueling summers of my life – PrYSM works with the local Southeast Asian / Cambodian community in Providence, and they were working on a deportation campaign at the time. It’s very difficult to sum up this experience in a few words, but I usually boil it down again to the word “respect.” Respect for different people, their cultures and lifestyles, and their struggles for a better life and world. Thinking about the possibility of a Kiva Fellowship, I hope to be able to regain that ongoing feeling of “respect” for others.

Since graduating from Brown in 2006 I’ve worked in web management and government consulting. The fields that I’ve entered are interesting, but they weren’t necessarily ones that I would’ve envisioned myself in coming out of college. I believe that I can gain solid experience and knowledge from working in the private sector that would someday translate into value-added work for the public sector. While I’m still trying to work through what my short-term goals are, I’ve always been convinced that I want to work in the public or non-profit sector in the long run.

For all the above reasons I believe that a Kiva Fellowship would be a great opportunity for me at this point of my life. I’ve gained some great experience working in the private sector, but would greatly appreciate the opportunity to work with a nonprofit again – especially an organization with an international development scope that deals with social entrepreneurship, within the cross-section between the private and public sectors.

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