Ranking Kiva’s Partners – The Need Factor
Earlier this month I posted an analysis of which countries most need Kiva.org’s microfinance services (based on their poverty rates) and which countries are getting them (based on Kiva’s actual lending data). This analysis provides an opportunity to update my ranking of Kiva in-country microfinance banking institutions from last fall, to include “relative need”.November’s ranking derived from three factors: an MFI’s interest charging practices, its cumulative experience, and its risk level. The ranking simply composited these factors. A downside of this approach is that some of the neediest countries – e.g., many if Africa – by their nature may cause MFI’s to score poorly in the rankings. (For example, poor infrastructure such as roads, etc., will drive up the interest rates MFI’s must charge, to cover the transactional costs of the loans.)
Including the “need factor” based on poverty rates and Kiva penetration helps offset this bias, and helps identify those MFI’s that may be “worth taking a chance on” in high-need, but higher-risk, countries. Below is a revised regional ranking, in which I have also filtered out about a third of the MFIs with extremely low scores in any of the four metrics:
To simplify things, I’ve also recreated a “top 20 table” from the overall rankings. In this table, any MFI with a score in the lower third of any of the four sub-factors has been filtered out. In short, this table provides a way to pick Kiva loans such that your loan dollars go to the neediest regions of the world, while balancing your financial risk and rewarding institutions that keep their interest rates within (or better than) the norm for microloans.