Thursday, September 30, 2010

If you're going to invest in the future you have to ask yourself, what's in the future? Lithium and coffee are good bets.

In my quest to better understand who Kiva loans to I looked into who gets the most money.  Surprisingly I found it was Bolivia and Uganda.  My first thoughts were, Why?  I know almost nothing about Bolivia and even less about Uganda.  I know which continent each are on, which is probably a leap over most Americans.  Cynicism aside, why are they getting lots more money than other countries?  What's going on in these countries that make them so appealing?  Why am I asking this?  Take a look (I apologize for the poorly rendered graphic but I cannot yet post a Tableau 6 public viz since it's still in beta and hence a bit skewed):

With my limited information, I could surmise that Kiva gives loans to countries that have lithium (Bolivia), for the lithium ion batteries in your laptops and hybrid cars, and coffee (Uganda) because high-end, delicious coffee is market valuable. But there must be more, right?

For Bolivia there is.  They have a 0.00% delinquency and 0.00% default rate.  Stellar!  And their economy is growing respectably.  In many ways, they've benefitted from the post-Cold War period: even after the West pulled their support in the late 1980s, Bolivia had the second largest reserve of natural gas in South America and now with the growing importance of lithium they have quite a leg to lean on.

But what about Uganda?  Uganda is in the Top 5 for delinquency.  So why does Kiva loan to them?  It could be their vast coffee exports, 56% of GDP.  Is that enough?  Clearly this warrants more study.

And with all this, what's up with the Dominican Republic? They're in the Top 10  of direct loans from Kiva, but with a considerable default rate.  What are they doing that affords them additional funding even with a high default rate?

More importantly, in emerging economies how can we replicate what Bolivia and the others in the Top Tier countries are doing especially with their miniscule default rate?

Stay tuned.

Monday, September 13, 2010

Where exactly are your Kiva micro loans going?

I love  I love the idea of Kiva (micro lending) and the practice is so easy it makes me smile (and make regular loans).   In lieu of a Peet's cappuccino each day I can help a Peruvian woman buy a motorcycle to transport her family to the doctor, or to buy supplies to make clothes or to sell cosmetics, or to stock her grocery store.  I'm not sure why Peruvian women are such a lure for me, but they are.  And Nicaraguan women.  It's women.  I find myself wanting to help women in developing nations improve their lives.  Women in Central and South America.  Women in Africa.  Women the wold over.

These are the entrepreneurs that I sponsor: the Peruvian and the Nicaraguan women.  These are the women that I envision when making my loans.

I made my first Kiva loan in February 2009.  I think I heard about Kiva on NPR and was instantly hooked.  I loved the idea of direct assistance and assistance to women in particular.  Since then, I've made 10 loans, 3 to Nigerian women, 2 to Peruvian women, and 1 each to women in Nicaragua, Cambodia, Mexico, the Dominican Republic, and the Philippines.  For some reason, I thought they were mostly Peruvian women but alas the data tells a different story.

Tonight I was wondering where Kiva sends its money and whether some countries are better than others at repaying their loans.  And, with the miraculous wizardry of Tableau I was able to quickly see that there is a correlation between place and delinquency, place and loans disbursed.  Mind you, I'm talking correlation and not causality.  I don't have enough data to say why Kenya is the greatest defaulter of loans with the US trailing as a close second, or why Tanzania, Nicaragua and Ghana have delinquency rates exceeding 50%, which are considerably greater than any other country with active loans, but I can quickly see these details and that tells me there's something to investigate.

So what did I learn?  Kiva makes lots of loans to Cambodia and Peru.  And those borrowers, they're good for it.  In fact, they're better than those in the US.  Uganda gets less money and is a bigger risk.    The countries who were the biggest risks got the least money.  So, Kiva is spending my money well.  I think.  But what can we do to help those with high delinquency or default rates?  It must be more than your country of origin that shapes your credit worthiness.  Or so I would hope.  What do you think?

Check out my data set and visualizations at