MICROCAPITAL BRIEF: Kiva Piloting Peer-to-Peer Microfinance Lending Platform Kiva Zip in Kenya, San Francisco

Kiva, a US-based microfinance intermediary, is launching a new platform, Kiva Zip, enabling users to lend directly to microentrepreneurs around the world. Kiva Zip is currently running as a pilot program in Kenya and the US city of San Francisco, California. Loans are disbursed in Kenya via M-Pesa, a mobile phone money transfer service, and PayPal will be used to issue loans in the United States. Until now, Kiva loans have been disbursed in bulk to microfinance institutions that then screen and service individual borrowers.

To be eligible to receive a Kiva Zip loan, borrowers must be nominated by a Kiva-approved trustee. The trustee works with each borrower on both their business and personal finances. The number of borrowers that a trustee can vouch for is limited to prevent “binge endorsing,” but this number varies based on factors including the number of endorsements a trustee receives from users. Premal Shah, Kiva President, says this can be a substitute for a credit check. The pilot program is not yet available to everyone wishing to make a loan. As of January 2012, only users invited by Kiva may participate.

In 2011, approximately USD 90 million in loans were made via Kiva and its 146 partner MFIs to borrowers in 60 countries.

About Kiva
Incorporated in 2005, Kiva is a US-based online portal allowing individuals to make loans to microfinance institutions (MFIs), which then make loans to people with low incomes. Kiva partners with microfinance institutions (MFIs) in 60 developing and rich countries. As of September 2011, Kiva reports that: it has engaged 990,000 users, 625,000 of whom have funded a loan; 81 percent of loans have been made to women entrepreneurs; the repayment rate on these loans is 98.9 percent and the average loan size is USD 385. In 2011, approximately USD 90 million in loans was funded through Kiva and Kiva’s Field Partners (partner MFIs) to microentrepreneurs in 60 countries.

By Charlotte Newman, Research Associate

Sources and Additional Resources:

Social Capital Markets: “Kiva’s Secret Project to Let You Give Peer-to-Peer Loans,” http://socap.jc.exygy.com/2012/01/13/kiva%E2%80%99s-secret-project-to-let-you-give-peer-to-peer-loans/

MicroCapital.org story, November 11, 2009, “NEWS WIRE: United States: New York Times Calls Kiva’s ‘Person to Person’ Model an ‘Illusion’,” https://www.microcapital.org/news-wire-united-states-new-york-times-calls-kivas-person-to-person-model-an-illusion/

MicroCapital.org story, September 29, 2011, “Skincare Company Dermalogica Establishes Financial Independence Through Entrepreneurship (FITE) Project to Encourage Customers to Lend to Entrepreneurial Women via Microfinance Intermediary Kiva,” https://www.microcapital.org/microcapital-brief-skincare-company-dermalogica-establishes-financial-independence-through-entrepreneurship-fite-project-to-encourage-customers-to-lend-to-entrepreneurial-women-via-microfinance-int/

MicroCapital Universe Profile: Kiva
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kiva

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