Responsible Careers in Microlending

Last night I attended an interesting event on microlending organized by several Net Impact Chapters of the DC Area.  Professionals, as well as students from Johns Hopkins, Georgetown and George Washington University gathered to have a conversation on microlending with Giovanna Masci, a Yale MBA who joined KIVA.org 3 years ago and is now their Regional Director for Latin and North America.

As most of you know, KIVA is a leading microlending institution.  Through their website, you can review specific projects and entrepreneurs that you want to support, and agree to give money that will go to the micro-entrepreneur of your choice.  Your money will not lead to any dividend for you, but will be used by a microfinance institution (MFI) to make a loan to the micro-entrepreneur (with interest rates serving to cover capital costs for the MFI in the country where the micro-entrepreneur resides).  Through their website, KIVA has enabled lenders to fund over 500,000 micro-entrepreneurs in approximately 58  countries.  Since their launch in 2005, KIVA has enabled over $196M in loans to be distributed through 196 KIVA field partner MFIs.

Of course, KIVA, as a leader in microlending has not been spared by the critics and the sad events that have occurred in India and in Nicaragua.  Suicides following the predatory lending practices used by loan sharks and MFIs have led to increased scrutiny and have further underscored the importance for MFIs and micro-lending institutions to clearly document their impact through transparent governance and social performance measures.

But what are the career paths available in microlending institutions?  Responsible careers in microlending institutions such as KIVA include careers in portfolio management, product management, legal and human resources, software and website design engineers, as well as opportunities in marketing and communications.   At KIVA, the staff has grown from 30 people when Masci joined 3 years ago to 65 staff members today.  KIVA is currently funded through tips from its lenders as well as by grants.  Future trends for KIVA discussed by Giovanna Masci at the event yesterday included international expansion, student loans, and tighter social performance measures.  Let's discuss the responsible career implications of each of these trends.

To reach out to more lenders worldwide, KIVA is thinking about translating its website in several languages.  To do so, they will need multilingual responsible professionals with a background in marketing or communications as well as work experience in their target countries.  A great way for you to prepare for these opportunities might be to volunteer (e.g. Bankers Without Borders through the Grameen Foundation - http://www.bankerswithoutborders.com/).  By volunteering in communications or translations within the microfinance field, you are sure to position yourself well for future responsible career opportunities in microlending.

Announced last fall, the KIVA protocol of lenders funding specific micro-entrepreneurs in need will be expanded to provide students loans.  The goal is here to enable students in impoverished regions to gain access to higher education.  This program is currently available to students in Lebanon, Bolivia and Paraguay.  This exciting new program might become a opportunity for youth to get out of poverty faster.  Unfortunately, it might lead to the same crushing student loan burden that many American students and graduates are currently facing. Of course, it will be key for KIVA to make sure that their MFI partners do not charge exorbitant student loan interests or push loans to students who want to pursue careers for which they don't need a college degree.  Professionals with portfolio management or product management experience will be needed to design and deliver products that will fit the needs of that new type of lender/borrower partnership.

Paramount to the success of KIVA and micro-lenders in general is their ability to demonstrate that microlending is indeed key to poverty alleviation and to economic and social stability for their partners and borrowers.  Measuring social impact is most difficult, and therefore, KIVA is for now focusing on measuring the financial and social performance of its partner MFIs.  By adapting the CERISE Social Performance Indicator to the different countries and regions it works in, KIVA is in the process of integrating social and financial performance measures that lenders can use to make decisions about who they want to lend to.  Furthermore, such measures also helps KIVA strengthen its relationships with current partner MFIs, as well as better assess future MFI partners.  If you are interested in portfolio management or product management careers in microlending and microfinance, learning more about social performance indexes, including CERISE, would be a great way to assess whether you would like this type of job, and to best position yourself as a credible candidate when you apply for opportunities.  In addition, reading 'Small Loans, Big Dreams' by Alex Counts can be a excellent preparation for anyone interested in learning more about microlending and social measures of poverty alleviation.

Overall, the field of microlending and microfinance is in a transition period that is pregnant with opportunities for responsible professionals.  As the field continues to evolve, it will need stronger regulations to prevent predatory lenders to call themselves micro-lenders.  In this context, professionals with a passion for poverty alleviation and sharp analytical and communication skills will be much needed to empirically demonstrate the power of micro-lending in helping micro-entrepreneurs and students reach their goal of self-sufficiency.

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