Status update — November 3, 2017
After 3 years of partnership and 1.5+ years of ongoing efforts to work with Buksh Foundation to encourage and facilitate repayment of the $16,416.54 owed to Kiva lenders by this organization, Kiva has decided to default Buksh Foundation’s balance and to close this partnership. Buksh Foundation hasn’t repaid funds owed to Kiva since January 2016, and since they didn’t communicate a clear reason for non-payment, their ability to fundraise on Kiva was stopped in March 2016. In December 2016, Buksh management agreed to make the repayment due to Kiva by January, however no repayments were received. Kiva has continued to work with Buksh Foundation to try to recover the outstanding amount due to Kiva lenders, however at present, Kiva is not convinced that Buksh Foundation intends to honor its debt commitment. If Kiva is able to recover any funds from Buksh Foundation, they will be applied to lenders' accounts on a pro-rata basis.

Kiva's policy is to consider legal options in a situation such as this, where the Lending Partner is non-responsive to Kiva's requests for repayment, despite the partnership agreement between Kiva and the partner. Based on our assessment of the likelihood of recovering funds, discussions with our lawyers and an evaluation of the legal and business contexts, Kiva has decided not to pursue legal action at this time. We may reevaluate in the future should our assessment change. For more information on the default risk of your loans, please visit Kiva's Risk and Due Diligence page.

Status update — April 4, 2017

Buksh Foundation has been late repaying funds owed to Kiva since January 2016. Following this late repayment, in March 2016 Kiva stopped Buksh Foundation’s ability to fundraise new loans on the Kiva platform. Since that time, the organization hasn't communicated a clear reason for non-payment and therefore we have paused this partnership. In December 2016, Buksh management agreed to make the repayment due to Kiva by January 2017, however no repayments were received. Kiva staff continue to follow up with Buksh Foundation to work to recover payments due to Kiva lenders. We will provide additional relevant information to lenders as it becomes available.

Partner description: 

Pakistan is on the brink of an energy crisis. Nearly 40,000 villages and almost half of individuals have no access to formal electricity services. Buksh Foundation, a microfinance institution in Pakistan, is attempting to address the critical need for access to reliable and affordable electricity among its clients. It is one of the few microfinance institutions in Pakistan with a clean energy program.

The depth of Buksh Foundation’s involvement in energy resulted largely in response to the underdeveloped state of Pakistan’s commercial energy sector. In order for its energy vision to be realized, Buksh Foundation coordinates various aspects of supply, not just end-user finance. This process includes product design, marketing, distribution, consumer education and after-sales service.

Buksh Foundation’s focuses its services on under priveleged men and women, who are largely excluded from microfinance services. The organization believes this is an important segment of society that plays an instrumental role in the economic livelihood and education of the family.  

A unique lending approach:

Buksh Foundation provides clean energy loans to small enterprises and rural households that struggle from inconsistent power supply. About 60% of Buksh Foundation’s clients are female.

Buksh Foundation’s solar energy loans facilitate client ownership of three different solar portable generators- a complete solar home solution, a solar fan kit and a solar lighting kit. Lamp stands, cords and mobile phone adaptors can all be plugged into the generators. Portable generators also include an AC adapter that provides users with the option of charging from the grid. All models have a one-year warranty and a five-year manufacturer warranty for the solar module with complete after-sales service for the clients.

Additionally, the organization offers training workshops aimed at capacity building, empowerment, enterprise creation, women's rights awareness and vocational training.

A note on Buksh Foundation’s portfolio yield: 

We care deeply about the cost that Kiva borrowers pay for their loans, which is why fair pricing is a core part of our initial due diligence process for Lending Partners. With Kiva's 0% capital, many of our Lending Partners are also able to add additional value to their loans by reducing interest rates, offering non-financial services or creating new loan products.

For partners with reported portfolio yields or average APRs higher than 50%, Kiva takes steps to check that the high rates are justified by the impact of the loans. Kiva also verifies that the partner is not generating unreasonable profits or paying inflated salaries, and that the partner’s elevated operating costs are justified by its operating environment and/or the design of its loan products.

We seek to support loans that don’t impose an unjustifiable cost burden on hard-working borrowers. We nevertheless recognize that in order to reach vulnerable and excluded people with high-impact products and services, some of our partners incur high costs that necessitate charging higher-than-average costs to borrowers in order to allow for sustainability and scale. 

Factors that drive up the costs that this partner organization charges its borrowers include:

• They operate in a market with high inflation—averaging 10% from 2011-2013, which means that the rates you see on Kiva are overstated, since loans are given in local currency, which lost value much more quickly than the U.S. dollar.
• They pay high interest rates on the loans they take from banks and other funders, given the market in which they operate. This means they need more support from innovative sources like Kiva to reduce costs and pass savings on to borrowers.
• They’re a small company or organization that hasn’t yet achieved the scale and efficiency necessary to reach sustainability and reduce pricing, but the impact of their services merits the opportunity to prove their business model.
• They work extensively in rural areas, which requires their employees to engage in costly travel to find and serve their clients.