(*don’t know your customer)
Truth in advertising has never been very highly valued in the microfinance sector. Know-your-customer (KYC) sadly is also a much-espoused but rarely-heeded principle. The current promotional video for on-line lending platform Kiva shows that Kiva cares about neither.
This most widely known online microlending platform once claimed it facilitated person-to-person (P2P) microending. After the New York Times debunked that as a deceptive illusion in 2009, Kiva had to retract the claim, now fielding the (far clearer?) promise to “connect people through lending to alleviate poverty”. In fact, what Kiva does is merely lend your money for free to microfinance institutions (MFIs), which can then on-lend the money in whichever way they see fit, at interest rates somewhere between 20% and 100% APR. The joyful little cartoon video about “Pedro, a farmer who gets a loan through Kiva.org and transforms his business” doesn’t exactly make this clear.
But the main problem with Kiva’s video How Kiva Works is that the claimed impact of microloans is so absurd, it prompts serious questions about who at Kiva actually knows anything about what microfinance does. Let’s briefly look behind the cutesy imagery.