Kiva conducts regular, ongoing monitoring of all Lending Partners, but only posts status updates here in response to relevant, major changes at the partner.

Status update — October 29, 2019
In July 2019, the Zimbabwean government issued new legislation barring use of the US dollar and converting all prices and contracts previously denominated in USD to Zimbabwean dollars at a 1:1 ratio. The new Zimbabwean dollar, which was introduced in October 2018, is in a period of rampant hyperinflation. The July legislation that outlawed the use of USD converted Thrive's loan contracts denominated in USD into Zimbabwean dollars, which caused Thrive's portfolio to lose the majority of its value overnight. Thrive has consequently been unable to meet liquidity standards set by the government and is at risk of losing its microfinance institution license. Faced with this situation, Thrive's international funders, including Kiva, have agreed to default their outstanding loans to Thrive. Kiva is therefore defaulting the remaining $268,801 in outstanding loans disbursed prior to this regulation change in July 2019. This is highly unusual, but is the best option to give Thrive a chance to survive the current economic crisis. On their side, Thrive has laid off 40% of staff to cut costs and is focused on keeping its doors open so that it can resume normal operations when economic conditions improve. If the situation improves for Thrive and Kiva is able to recover any additional funds in the future, they will be applied to lenders' accounts on a pro-rata basis.

During this partnership, Kiva lenders have supported Thrive to train and lend to almost 20,000 women since beginning operations in 2012. In total, Kiva lenders have made nearly $4 million dollars in loans to vulnerable women possible. Kiva is proud of the work that Thrive has done in a very tough operating environment and sincerely hope that they are able to recover from the macro-economic crisis and continue to be a force of positive impact in Zimbabwe.

Partner description:
THRIVE Microfinance is a microfinance institution in Zimbabwe that was founded in 2012 by former Kiva Fellow Henry Bartram. The organization provides productive business loans to women that utilize the group lending methodology, and provides auxiliary training before and after loans. The training enables borrowers to fully understand the strengths and weaknesses of their businesses and those of the other members of their groups. It also makes borrowers aware of the risks and liabilities involved in taking out a loan and ensure that they have a clear and profitable use for the money they borrow. They are taught to keep simple financial records.

The organization currently operates from two offices and currently supports more than 400 groups.

A unique lending approach:

Thrive has developed its own in-house poverty assessment tool.  It uses national poverty assessment statistics and has developed a series of simple questions that enable it to assess the likelihood that a borrower is poor and changes in the level of poverty over time.

Preliminary results indicate that 68% of all first time borrowers are likely poor and borrowers show improvements in their overall standard of living as they continue in the system.

Thrive also undertakes exit interviews and training evaluation to ensure that the needs of its borrowers are being met.

A note from THRIVE:

THRIVE is an independent organization and does not exist within a larger network that can support its operations.  It receives no funding from governments or other charitable organizations.  It is run on the basis of sustainability so that it is not dependent upon the support of third parties for its survival.  If we fall, there is no one to catch us and we operate in a challenging environment where many similar organizations have fallen.

Any profits are retained in the business for the benefits of borrowers – no dividends or bonuses are paid.  We expect to be broadly breakeven in 2014, our third year of existence.  We actively seek ways to reduce the cost to borrowers and recently introduced a lower rate so that borrowers borrowing less than $275, pay 3%/month compared with 5% for all other borrowers.  As we can reduce borrowing costs we will do so.

Zimbabwe is a high-cost economy.  Following hyperinflation, there is very little liquidity and our next-best alternative source of funds after Kiva costs us about 17% per annum.  THRIVE’s interest rates compare very well with nearly all lenders in Zimbabwe.

Costs to borrowers do not only consist of interest costs.  We spend a long time training borrowers and this is a key reason for our higher interest rates – we have to recover these costs.  As a result, we make fewer bad loans, which is demonstrated by the fact that our bad debts compare well with most other MFIs in Zimbabwe.

We believe that avoiding bad loans is a key responsibility.  We only lend for business purposes.  Bad loans are very costly to borrowers.  An inappropriate loan at low interest rates is more difficult to repay than an appropriate loan at a higher interest rate because the underlying income generation is not there.  The key to affordability for the borrower is not the interest rate (unless it is exorbitant) but whether the loan is to support a well thought-through business application that is likely to succeed.

Our training does not only help us to avoid bad loans.  It also helps our borrowers to manage their financial affairs more effectively.  We believe that the ability to make good financial decisions is a key life skill.  Even though we could reduce the interest rate if we reduced the amount of training, we do not believe that it is in our borrowers’ interests to do so.

A Note on Thrive’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. With this partner, Kiva capital is supporting a loan product that costs less than the partner's typical products.

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

• They provide more than just cash to many of their borrowers, including costly wraparound services such as healthcare, financial or business training, agricultural extension services, insurance or access to education.
• 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.
• This partner is working in a country where doing business is difficult and costly due to regulatory, procedural and governance issues.
• They work extensively in rural areas, which requires their employees to engage in costly travel to find and serve their clients.
• They operate in an area with a limited or poorly functioning banking system. This makes it difficult to access funding locally, and makes it more challenging to send and receive payments on loans from outside the country.