• Creditors, including Kiva, will not require repayment of any principal until January 1, 2013.   After such time, the creditors will work with CRAN to develop a repayment plan considering the organization’s health. 
• One of CRAN's creditors, CORDAID, has agreed to provide CRAN with additional funds, a portion of which will be in the form of a grant and the remainder in the form of additional loan financing. The making of these payments by Cordaid will be conditioned upon CRAN fulfilling certain management and operational milestones. 
• During the negotiation of the original Standstill Agreement, Kiva was paid $42,492 by CRAN, which we repaid to Kiva lenders.  In order to help ensure that CRAN has sufficient cash to continue to operate and ultimately repay all Kiva funds and to ensure fairness to all creditors, it was agreed that Kiva will remit that payment back to CRAN, by temporarily turning settlements off until a balance of $42,492 in new capital has been built up and remitted to CRAN.
• Kiva will extend its ongoing policy of allowing CRAN to continue to raise funds on the Kiva website. Once the $42,492 new balance is accrued (as described in the preceding bullet point), as before, new funds raised will be used to make repayments on older CRAN loans via Kiva’s standard net billing process.
• CRAN’s founder and CEO will step down as CEO, but will remain with the organization as a member of the Board and will provide advisory support to CRAN.  A new experienced CEO is in the process of being hired.

Status Update: November 5, 2010

Earlier this year, Kiva entered into a six month Standstill Agreement with CRAN. Creditors, including Kiva, CORDAID and Tara Jane Trust, agreed not to demand cash repayments during this period in order to give CRAN sufficient time to recover from high levels of portfolio at risk.

These decisions were made in order to help maximize CRAN's chances of successfully regaining its footing, and repaying Kiva lenders' capital. In addition:

• Kiva agreed to continue to allow CRAN to fundraise on the website, subject to clear warnings and disclaimers that have been placed on each loan, describing the higher risk entailed in lending to CRAN borrowers.
• Also, Kiva agreed to allow repayments from CRAN borrowers to be allotted to lenders through net billing.

On October 11, 2010, Kiva and CRAN’s two other creditors agreed to extend the formal standstill for an additional two months. This was agreed upon in order to allow the creditors and CRAN to settle on a long-term plan to allow the organization to regain its footing.

Kiva will update CRAN’s partner page with additional information as it becomes available to us.

Status Update: May 10, 2010

Kiva, along with CRAN’s two other creditors (CORDAID and Tara Jane Trust), have entered into a six month Standstill Agreement with CRAN. Under the terms of this agreement, CRAN is obligated to engage a turnaround specialist, strengthen management structures, pursue and report on progress (monthly) in recovering delinquent loans, tightly control delinquency on new loans to clients, and engage new external auditors. Creditors, including Kiva, have agreed not to demand cash repayments during this period in order to give CRAN sufficient time to recover from high levels of portfolio at risk.

During the Standstill Agreement period, Kiva has decided to allow CRAN to continue raising funds on the website. New funds raised will largely be used to make repayments on older CRAN loans via Kiva’s standard net billing process. Kiva lenders are warned that loans to borrowers with CRAN are currently highly risky.

To date, CRAN has made significant progress on the conditions of the Standstill Agreement. Specifically, the organization has engaged a qualified individual associated with Freedom from Hunger Ghana to train CRAN staff on appropriate delinquency management and to reform the credit methodology. Collections on the most delinquent loans are in line with targets specified in the Standstill Agreement and delinquency is very low on loans disbursed under the new credit methodology. Long term, Kiva is encouraged at the level of involvement of the Board in the turnaround effort and the beginnings of a restructuring of management to ensure professionalism of the microfinance program.

Kiva will update CRAN’s partner page with relevant news as it becomes available to us.

Status Update: September 18, 2009

Following an onsite visit by Kiva’s Microfinance Partnerships Manager for Anglophone Africa and Portfolio and Risk Director, Kiva learned that CRAN has suffered significant deterioration in its overall portfolio quality revealing a portfolio at risk greater than 30 days of approximately 55% as of late August 2009 (approximately 55% of outstanding funds to borrowers have been overdue more than 30 days). While Kiva requires quarterly portfolio and financial reporting from all partners, Kiva staff learned onsite that previously reported figures, including first quarter figures for 2009, showed significantly lower delinquency as result of the fact that they only reflected a subset of the portfolio.

During the onsite visit, Kiva learned that loans have become increasingly overdue as a result of insufficient follow up on arrears cases by CRAN staff, an improveable credit methodology, significant external shocks to the local economy especially in the area of fishing in the Cape Coast area (where 5 of CRAN’s 7 offices operate), and seasonality correlated with crop cycles. These strains have been corroborated with anecdotal evidence from a recent Kiva Fellow who did not find any misrepresentation of borrower profiles on Kiva.

CRAN has put together a recovery plan since Kiva’s visit that focuses on monitoring loan delinquency more closely, revising cashflow projections, employing four additional Loan Recovery Officers to pursue severely delinquent loans in court, waiving additional interest on overdue loans, and ensuring data quality through more timely reconciliation. Kiva has spoken with management and the Chair of the Board of Directors to discuss the plan and is following its implementation closely.

Kiva has decided to allow CRAN to continue to post borrowers to Kiva, albeit at a lower rate, with the clear and full disclosure that these are very high risk loans. Kiva will continue to monitor this partner on an ongoing basis and will post further updates as we receive further information.

Original Partner Description:

Christian Rural Aid Network (CRAN) is a Christian development NGO striving to reduce poverty and its effects among disadvantaged groups and communities in rural Ghana. CRAN's vision is to see a Ghanaian society in which poverty and its concomitants are substantially reduced, if not completely eradicated. The NGO’s broad aim is to promote the socio-economic development of the rural poor through a focus on the economic and social empowerment of women as well as the right of children to quality formal basic education. Its work is based on the values of Christian motivation and obligation towards the development of the individual as a whole. Towards this end, CRAN staff works tirelessly to improve quality of life for the rural poor in a holistic manner (physically, socially, economically and spiritually) through projects in social development as well as a thriving microfinance program. The CRAN staff employs and promotes demand-led and self-help strategies towards rural community development and poverty reduction in a professional and qualitative manner, with a commitment to ensuring an improved quality of life for the majority of Ghana’s population who reside in mainly squalid and distressed communities. With Cape Coast as the NGO’s headquarters, CRAN currently operates in three regions of Ghana from eight branches, and has served over 20,000 loan clients in its microfinance program.