Kiva – Year 2 Report

Another year older, another year wiser – or so the saying goes – and while 2014 has been eventual I’m glad that I’ve continued playing with Kiva. I did stop adding new credit about half way through the year, but I have continued to fully re-lend all existing credit, which with repayments of ~$100 means I can fund 4 new loans a month; which is enough to make myself feel good / do something positive (delete as appropriate). When I wrote the Year 1 Report I can remember being surprised at the total value of deposits I’d managed in 2013, so I’m not surprised that re-lending, over continuing to add more credit, became more desirable this last year.

So, what do the figures look like now?

  • Total Loans = 132
    • 2013 = 58
  • Total Deposits = $1,209
    • 2013 = $829
  • Total Lent = $3,450
    • 2013 = $1,600
  • Total Repaid = $2,148.72
    • 2013 = $751.82
  • Number of Fully Repaid Loans = 52
    • 2013 = 10
  • Total Value of Fully Repaid Loans = $1,600
    • 2013 = $375
  • Total Outstanding = $1,148.36
    • 2013 = $797.18
  • Total Amount Lost = $27.92
    • 2013 = $1.00
  • Amount Lost due to Default = $16.23
    • 2013 = $0
  • Amount Lost due to Exchange Rate Changes = $11.69
    • 2013 = $1
  • Countries = 49 / 85
    • 2013 = 45 / 73
  • Total Refunded and Expired = $125.00
    • 2013 = $50
  • Number of Loans Delinquent = 6
    • 2013 = 5
  • Amount In Arrears = $30.09
    • 2013 = $8.96
  • Delinquency Rate = 2.62% (arrears / total outstanding)
    • 2013 = 1.12%

There are a few interesting points, especially around losses, that I’ll take a few seconds to briefly explain.

Firstly, losses caused by the exchange rate fluctuating are something to be expected as part of lending on Kiva – I mention this briefly in the Year 1 Report – and these loans were located in Liberia, Ghana (x2), Columbia, and Mongolia with durations of between 8-20 months, each loss averaging to ~$2.40, or a cheap cup of coffee. I admit that as a percentage of $25 it’s more than you’d like to see, but contrast those 5 losses totalling less than $12 to the $2,148.72 in total repayments and that percentage is no longer a concern, a minuscule 0.5% of the total value of repaid loans since I started this two years ago.

The other loan, the default, is a bit more concerning – but not for the reasons you’d think.

You see, I mentioned a few loans I’d made in the Year 1 Report to give an impression of the different types of loans you are able to make on Kiva, and this defaulted loan just so happens to be one of the those that I listed. It was the one to the watermelon farmer, that lives in Ukraine. Now, Kiva don’t tell you what part of a country someone is located, but occasionally loan descriptions do contain this information, Pavel’s didn’t, but, Agro Capital Management LLC – the Field Partner the loan was made with – do state that the majority of their loans are based in Crimea.

I hope that Putin enjoys my watermelons.

Kiva – Year 1 Report

Pin-pointing the first time I was told that “the purpose of life is to pull people up rather than to hold them under” is a difficult one, but if I was pushed to pass on one piece of advice to another, that would be it. While this is, more or less, a restatement that we are standing on the shoulders of giants, with the implication that if you are one of the first to reach the new height then you (to risk of further straining the metaphor) help others to climb and to see in to the distance with you, it doesn’t necessarily make it redundant.

I appreciate that this is a fairly pretentious way to frame the sentiment that we should be good to each other, and never purposefully inhibit those that have done us no harm. However – and even the most ardent adherers to doctrine must agree – that “the game” at present is framed towards taking from others to further yourself, with the aim to amass greater and greater quantities of wealth, rather than collectively pushing forward with the interests of all.

Oh how simple it all sounds…

For me, charity has always seemed to be a partial solution to this problem (in fact it’s probably one of the better ways we’ll ever have), and exactly a year ago today, after a few months consideration, I decided to do something positive and created an account on Kiva.

Kiva is a micro-credit service facilitated by users lending money to entrepreneurs and students in 73 countries via a network of field partners. People sign up to Kiva, add funds via a Paypal account, and then use these funds to facilitate loans in multiples of $25 (up to a maximum of $500) to any available loan listed here. Once a loan is made, and fully funded, the money will be started being paid back – exactly like a typical loan – but while the field-partners charge interest on the loans that are made, neither Kiva or its users receive any additional payments (a point must be made here, if I were to put the money in to a flexible savings account, I would be earning a rate of interest probably not much better than 0%).

This means that for every $25 I deposit in to my Kiva account, the maximum I will ever receive back (bar extremely unlikely positive shifts in the exchange rate) is that ‘same’ $25, and much like any typical loan the lenders can miss payments or under pay (delinquency), or even over pay, or simply never pay the money back (default).

In the past 12 months these are my headline stats:

  • Total Loans = 58
  • Total Deposits = $829 (as to why this isn’t a multiple of $25 I’m not sure)
  • Total Lent = $1600
  • Total Repaid = $751.82
  • Number of Fully Repaid Loans = 10
  • Total Value of Fully Repaid Loans = $375
  • Total Outstanding = $797.18
  • Total Amount Lost = $1.00
  • Amount Lost due to Default = $0
  • Amount Lost due to Exchange Rate Changes = $1
  • Countries = 45 / 73
  • Total Refunded and Expired = $50 (this occurs when a loan is not fully funded within the time limit)
  • Number of Loans Delinquent = 5
  • Amount In Arrears = $8.96
  • Delinquency Rate = 1.12% (arrears / total outstanding)

So far this means that I’ve made loans to numerous people, with virtually all having a perfect repayment record. This spans from watermelon farmers in Ukraine, to a taxi driver in AzerbaijanChild Care in Iraq and a fruit and veg stall in Timor-Leste. It needs to be mentioned that delinquency rates are actually quite volatile, and typically the lenders will correct these within 1 month, indeed only 1 of the 5 currently delinquent loans has been delinquent before, and this gives me a high confidence that these loans will correct themselves over the next 12 months and/or the end of the specific loan period. To give context, in January ’14 I am expecting repayment on 40 loans ($100.23), with 43 in February ($99.83) and another 43 in March ($97.29) with the vast majority paying back on time (if not slightly sooner). This ~$300 can be immediately relent and used to fund up to 12 new loans, and this experience over the last 12 months has given me the feeling that – while I am admittedly not making any money – I’m not losing any, and as I can withdraw the funds whenever I wish, or choose to re-lend them, I haven’t felt that I’m being “cheated” at all.

But when it comes to choosing loans, and as it is ultimately my money, I have two rules I stick by:

  1. A 50/50 overall gender-split on loans.
  2. All Field Partners must be secular in nature.

As it happens, neither of these two rules are hard to accomplish using the extensive options available as part of the built-in search functionality, and also those materials provided by the “Atheists, Agnostics, Skeptics, Freethinkers, Secular Humanists and the Non-Religious” Lending Team who’s goal is to promote secular values (by helping loans from secular Field Partners, especially in theocratic countries) and show that “we care about the suffering of human beings”. This team alone has so far made over $13.5 million of loans since August 2008, making them the single largest loaning team on Kiva – an impressive achievement in anyone’s books.

If you’ve made it this far, and are possibly interested in “having a play” with Kiva, and seeing just what you can do, it’s simply and all you need to do is click here…

and Sign Up – even better, if you do, both you and me will get $25 of free loan credit to go towards funding a loan.

Go on – do something different in 2014.

Bookshelf I – Abundance: The Future Is Better Than You Think

After months of trying to finish off my Christmas Reading List – success eventually arriving in late February – I finally read “Abundance: The Future Is Better Than You Think” by Steven Kotler and Peter Diamandis. For those that haven’t yet read it, ‘Abundance’ extols – to a manifestoesque degree – a new hybrid of ‘Philanthrocapitalism’ and ‘Technophilantropy’, promoting – and in many cases, providing convincing proof – that using technology a rising tide really can lift all boats.

Health Care (23andMe), Energy (Elon Musk’s SolarCity, et al), Food (Vertical Farms and hydroponics), Freedom of Speech and Association (Twitter, Facebook, etc – Palringo being a noted absence), and Micro-finance ( being just a few of the wide range of topics covered; ‘Abundance’ makes the claim that with a new way of thinking, with a focus on global rather than local solutions, and providing technology that stands to save us all, we may have the ability to not just provide food, water, and shelter to 9 billion people – but to provide these at a standard that would befit the average European today. This can be accomplished, ‘Abundance’ claims, by utilising the rate of growth associated with exponential technologies.

‘Abundance’ proposes a new model, based heavily on Maslow’s ‘Hierarchy of Needs‘ named – cunningly – the ‘Abundance Pyramid’. Each part of the book relates to each of the levels in the Pyramid and how existing companies are working towards providing each of the requirements. I won’t replicate the Pyramid in full here, however ‘Part 3: Building the Base of the Pyramid’ is focused on how to provide: Communication (via smartphones, and unfiltered universally accessible internet access); clean, reliable, and accessible water; and a sustainable food supply, with a heavy focus on GMOs.

While ‘Abundance’ does pay lip service to the potential problems that may arise with smarter technology, it is written – like any manifesto – from an optimistic view point, and largely downplays any of the potential problems. This is in stark contrast to ‘The Net Delusion: How Not to Liberate the World‘, by Evgeny Morozov that extols the view that smarter technology, whilst providing many positives, also gives corrupt regimes access to very highly targeted data and that it is only a matter of time before these regimes utilise technology similar to that which runs Google’s AdSense platform for less-than-good purposes.

As the book progresses, Peter Diamandis’ influence becomes more prevalent, with many mentions of both his ‘Singularity University‘ and the ‘X-Prize‘ culminating in his belief that incentive prizes, like the X-Prize, are the only way to accelerate the progress that we are currently making. He very may well be correct, however the proof provided – there have, so far, only been 3 completed X-Prizes – seemed to be lacking for a statement of that calibre. However, given Dr Diamandis’ track record, I don’t expect him to be far off the mark.

Overall, the book is a very interesting read, highlighting some key areas, and has definitely challenged – and indeed changed – some of my previously held perceptions, and for that reason alone, I’d highly recommend it.