Walking the talk: When a low-income borrower comes to your doorstep

I’m a Kiva lender; I go to their web site, browse entrepreneur profiles and loan small amounts of money to worthy borrowers. In my case, I’ve lent in Peru, Nicaragua and Kenya. Like many others, I like Kiva because it gives me a personal, tactical way to act on my values. I believe that market-based anti-poverty interventions – including microfinance – are important in the overall fight against poverty. Underlying this is my belief that the poor should not be victimized by high-interest moneylenders or banks’ insistence on collateral that the poor don’t have.

Today, Kiva came home – literally. The doorbell rang as I was making breakfast; outside, our building watchman waited. Saab, (sir) he began, wringing his hands at his waist. He continued in Hindi; I struggled to keep up with him. I need to borrow 5000 rupees (about USD $110). For my daughter. She needs to go to the hospital for treatment.

He looked at the ground, nervously; I quietly asked him to confirm the amount and who needed to go to the hospital. (Because I still get confused between thousands vs. hundreds and daughter vs. son when it comes to my rudimentary Hindi skills.)

Bhai, (brother) I’m sorry your daughter is sick. Come back tomorrow morning at 9:30.

Now what?

I’ve been going over this in my head all day. Unexpected health expenses can lead to what Duke University professor Anirudh Krishna calls the “health poverty trap“. To quote Dr. Krishna’s study, as reported by IFPRI:

There is never an ideal moment to get sick. People do not plan for illness and injury when they are formulating their schedules, budgets, or goals for the future. But health shocks, which arise suddenly and can linger indefinitely, can have devastating results. For many people, the personal and financial burden of severe health shocks (like chronic illness, serious injury, or the death of a family member) can be overwhelming. For the world’s poor, however, these shocks are nothing short of catastrophic.

In short: this is serious. The watchman asked me for a loan, to pay for his daughter’s healthcare costs. He is in a no-win situation: borrow the money somewhere, or have his daughter forgo treatment. I’ve no doubt he’ll come up with the money – if I refuse, he’ll borrow from friends, family or – last resort – an informal moneylender. And if he can’t pay back the loan, he will join millions of others in the downward spiral of a health poverty trap.

There’s no guarantee he’ll pay me back; I can’t (and won’t) ask for collateral. He’s already borrowed from me twice – to pay for food while on duty – and has paid me back within 48 hours. Those were much smaller loans – 200 rupees ($4.50) each time – but he does have a history of on-time repayment, so to speak. And no, I wouldn’t charge interest.

At a more abstract level, I’m not fit to be a lender to the watchman. I don’t speak enough Hindi. I can’t assess his creditworthiness, unless I’m willing to ask him for his salary information and speak to people who know him (which I don’t have the time or willingness to do). I don’t know where he lives. And this may sound harsh/crazy, but I don’t even know if he has a daughter – let alone if she’s sick! In short, I have limited information and neither the skills (language) nor the time to get what I would need to make a fully informed lending decision.

Aside: High net worth donors often talk about investing directly in businesses that serve the poor. At Acumen Fund, we believe that our ability to source, diligence and manage a portfolio of companies serving low-income customers is efficient – more efficient (and therefore more impactful) than if the donor were to invest directly. It’s not a one to one analogy, but I feel today a little like the (unwitting) donor, about to inefficiently enter into a transaction I’m not prepared to properly manage.

So back to the issue at hand: what to do about the watchman’s loan request?

My thought process:
1. Yes, 5000 rupees is a lot of money. But I can afford it, even if the watchman defaults.
2. I am in a unique position to help someone; is it ethical to refuse? Peter Singer – a philosopher whose views I respect – argues that it is a moral imperative to say yes to the watchman:

If we can prevent something bad without sacrificing anything of comparable significance, we ought to do it; absolute poverty is bad; there is some poverty we can prevent without sacrificing anything of comparable moral significance; therefore we ought to prevent some absolute poverty.

3. I will treat the watchman with dignity and respect. I know he does not want to ask for a loan, especially one to pay for health expenses. I refuse to think of the what-ifs – what if he doesn’t have a daughter? What if his daughter isn’t sick? What if he uses the money to buy food, or cigarettes? No, I’m not going to play high-minded games here. I will take this man at his word.
4. I want to be paid back, without interest, in a time frame to be agreed upon (relying here on my Hindi skills) with the watchman.
5. In case of default, I will ask the watchman do some work for me around the house to repay me in-kind.

I don’t pretend to be the first person who has been asked by someone less fortunate for a loan. I’m certainly not unique. But I’m also trying hard to live my values, to walk the talk. And I’m more grateful than ever for what I have.

So, in a sense, my very disintermediated Kiva experience came – in the form of the watchman – to my doorstep in very human form this morning. I’m not sure I’m doing the most efficient thing, but I am going to try and do the right thing.

When the watchman comes back tomorrow, I’ll have the 5000 rupees, and will have looked up enough Hindi words – thank you, Google Translate – to try and make it clear what the terms are.

What do you think? Am I missing something? What would you do?


About Rob

Twitter @robertkatz
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17 Responses to Walking the talk: When a low-income borrower comes to your doorstep

  1. Minna Katz says:

    that happened to me,years ago,when I was working at a rehab facility in Seattle.
    I gave the loan,it was repaid,sans interest,and I felt as you did.
    At that long ago time,micro loans were not being talked about or known yet,but there were moral imperatives in play,and I had to do what I could live with,in helping someone.
    Go Rob!!

  2. Abby says:

    If you trust him, go for it. Maybe take a quick survey of your neighbors and see if he’s ever asked them.

  3. Mom says:

    Instead of typing through tears, I wish I could give you the hug your thoughtful actions deserve… I am so proud to be your Mom…xxxooo

  4. Dad says:

    See Mom’s comment – my keyboard is wet, too!
    Luv ya!

  5. Judy says:

    I am trying to remember if I ever had this situation in Egypt. Can’t remember, but here are a few of my questions:

    Did Kiva ask anyone else in the building? Do you know why he came to you?
    How will you handle requests for loans from other household staff? The local staff in the building will know that you are the source of the loan.
    Does it make sense to have the terms written with a copy for each of you (even though he may be illiterate)?

    Anyway, good luck with this….I am sure that I would proceed in the same path, but it is important to think about these questions because I understand from the reading I did on India before visiting, that the request for loans by household staff is not an uncommon circumstance in India.

  6. Aunt Martha says:

    Whatever your decision, Rob, what is most important to me is knowing that the values with which you were raised have guided you in the right way: to treat your watchman with dignity and respect, as each person should be.

  7. Pingback: Why isn’t he smiling? | The BobKatz Blog Project

  8. Sharmon says:

    We haven’t met yet but I work with Dan. You are doing the right thing. Do it and set your terms and be pleasantly surprised if you are repaid. My grandmother learned early in her life, and subsequently taught me, that you give with heart and you receive with surprise. Keep the faith no matter what the out come.

    All the best, Sharmon

    • Rob says:

      Thanks for your thoughtful reply, Sharmon! Your grandmother sounds like a fantastic lady. I love what you guys do at OV – you live your values every day. Keep up the good work! Take care.

  9. Sarah says:

    I understand your hesitance, but what makes you believe his daughter can wait 24 hours to go to the hospital?

  10. AJ says:

    Found you through a Kiva link. Your blog is terrific. 🙂 I’ve already noted down the title of a book you recommended, plus I’ll be looking to hear more about the watchman. I think that letting the Peter Singer quote guide you is an excellent way to navigate life. I believe in participating in more organized forms of giving/helping (hence, Kiva & other groups), but I also believe that when someone is standing in front of you bleeding, you bring them a bandage and even some Bactine if you have it. Better to be burned once by someone who has misrepresented themselves to you, than to operate with a level of cynicism/pessimism that prevents you from making a connection with a human being in need. Thanks for writing!

    • Rob says:

      AJ, thanks for the kind words. And what’s tough about living anywhere – but often more so in India, where things are a bit more in your face – is the natural tendency towards cynicism. I’m actively trying to believe people, to take them at their word and you know what – if it means I get played every once in a while, then so be it. I’d rather not be that guy. Appreciate your comments – I totally agree with you!

  11. kiva lender says:

    You are definitely doing the right thing. a) because of all the arguments Singer makes b) because it’s not like you don’t know where the guy works, if he doesn’t repay you, would he have to give up his job to avoid you? Do take the trouble of getting a hindi speaker to translate and make sure he understands your terms, if you feel you can’t get them across to him, but don’t second-guess the impulse to help here.

    • Rob says:

      Agreed completely, KL – there’s a disincentive to default here on his part that is larger than otherwise. Thanks for the advice and will keep you posted.

  12. Jenn says:

    We don’t often get the chance to give and be human like this. Glad you have the sense and compassion to just try it and see what happens, it’s so cool!

  13. Milaap says:

    Really touching story! Household staff in India do frequently ask for money, and they’re also usually good people – there are rarely occasions of default. Your compassion and willingness to trust is inspiring.

    Check out http://www.milaap.org for ways in which you can loan a very small sum of money and make a huge change in a borrower’s life. Keep us posted! 🙂

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