Microcredit Operators–>Microbanks–>Banks

By Cameron Morris, KF8 Mozambique

Microcredit operators, microbanks, and banks are the three primary designations for consumer facing financial institutions in Mozambique. Over the last couple of weeks I’ve been spending some of my time assisting the Kiva portfolio team with MFI recruitment. I’ve met with a full range of financial institutions with executive directors as diverse as the populations they serve.

I would guess that currently the majority of Kiva’s partners fall into the microcredit or microbank category. These institutions are the quaint organizations that usually characterize microfinance and that more importantly meet the requirements for working with Kiva.

What I’m curious about is what will happen when these institutions start to mature.

Almost every MFI that I’ve met with has some sort of multiple year plan to transform itself from microcredit operator to microbank or from microbank to bank. If our MFI partners start turning into banks (many many years down the road) will the Kiva community be as comfortable working with them as they currently are with working with darling microcredit operators?

The truth is that Kiva already does work with a full range of institutions and that there are obvious ways and reasons why Kiva should continue to support them. Unless poverty is completely eradicated these banks will continue to provide credit to low income clients and they will still be able to raise capital for these loans on Kiva’s site. Even if these institutions do become suspiciously more mature and their clientele become more prosperous the lender community should be equally as excited about working with them.

The lender community has the opportunity to continue to help shape relationships with partner institutions and the way they service their clients. Kiva has democratized investment decisions in a way that allows the community to say yes or no to an investment. As institutions grow, become more bureaucratic and potentially less social the Kiva community can act as a catalyst for responsible lending and let their money speak as an advocate for good practices. In this way the Kiva model is essentially scalable to any type of financial institute or client and as activists for this model we should push to see other forms of investments further democratized and opened up to more diverse opinions.

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