How do you make sure?

After some of my friends have read my previous post about Kiva...I have been addressed with some curious questions that I thought were interesting to share on the blog. So I chose to display part of my conversation with Jay Ar on MSN Messenger.

Jay Ar:
How do you insure that your money goes to the right person, and how do you insure the person is not going to buy drugs with it, even if he repays u back?

Pink:
That’s a good question ... there is a team of people that works locally. Kiva is based in California and the money it gets online is transferred to local MFIs (Micro Financial Institutions) that are located in the entrepreneurs' countries; They are the "Field Partners".
Those field partners are transparent and have regular credit checks, they gather info about the borrowers, their projects and enter all the data in their files and this is how any default in repayment is obvious. If a borrower does not repay, he is not sued of course, but he is asked to leave the program.
Borrowers are not irresponsible, they know that this money is lent to them…And I kept asking them in Bangladesh: why do they repay? Aren’t they tempted to just take the money and do something else with it? And the truth is, they know that this is their only chance to make it right. A poor Bengali woman who works in craft can be exploited by a manufacturer who would lend her some money in the exchange of buying her work for peanuts.

However, if she goes through a bank like the Grameen one or any other field partner, she can then expand her business, and her profits and once she repays her first loan she can ask for another (to improve her house) and again another (to send her children to university) and so on .. The Grameen borrowers are also encouraged to deposit money (GB is self efficient, it does not even require donations or external lending) We met women who have been with the Grameen Bank for over 17 and 20 years. They love it as it has truly improved their living conditions... we saw their stronger housing construction, the clean environment around their house, the fact that they ate more chicken for supper.. Great stuff.

Jay Ar:
When was the Grameen Bank founded?

Pink:
In 1983. So yes, it took years to develop great blue prints that allowed the system to be duplicated worldwide. Professor Yunus never let go!

When you have such a strong outline that shows how your system should be implemented, you make sure that you are giving it a stronger push and a global widespread.
And this is exactly what he has done. Kiva is one of Grameen Bank offsprings.

Jay Ar ended up telling me that I had convinced him...But what about You? Have I convinced you?