In December 2007, two things happened almost simultaneously:

1.) I enrolled in a Finance and Applied Mathematics dual-degree program at the University of Auckland and;

2.) Financial markets all over the world crashed overnight

This naturally meant that my entire tertiary education revolved around the recession. I spent many nights using the benefit of hindsight to build financial models that could’ve predicted the timing of America’s housing bubble burst. For one of my favourite courses, we had to perform investment analysis and research before picking a ten-stock portfolio on Google Finance to track over the course of the semester - grades dependent on how well our portfolios performed against the plummeting Dow Jones Industrial Average.

If you would’ve told me then, that nine years in the future, I would be in Kyrgyzstan, building a financial model to help microfinanced rural entrepreneurs maximise profits based on livestock portfolios and optimal reinvestment decisions, I would’ve said three things:

1.) Where is Kyrgyzstan?

2.) What is microfinance?

3.) Can I use your time machine?

Over the last month, I have been travelling all over Kyrgyzstan as a Kiva Fellow to meet Kiva borrowers who are clients of Bai Tushum Bank, a Kiva Field Partner. My travels have taken me to the homes of 14 borrowers in six out of the seven regions of Kyrgyzstan. Twelve of those borrowers were adorable Kyrgyz grandma’s working hard to develop their livestock business - a ratio that accurately reflects Bai Tushum’s Kiva borrower mix - hop onto their fundraising page and see for yourself!

The more I spoke to the borrowers, the more I realised that the livestock business in Kyrgyzstan has potential to be extremely profitable. My suspicions were confirmed when I met a software engineer that had just bought land to start a livestock business on the side himself - “there is a lot of money in this business here - the grass in Kyrgyzstan is premium and it is free in the mountains”, he said.

There aren’t many industries that measure success by an increase in the number of clients that don’t need their services anymore - microfinance is one of those industries.

The potential return on investment for a Kiva borrower in Kyrgyzstan was clearly very high, but somehow, the borrowers I met were unable to work their way of out debt-financed operations and into equity financed operations - the true goal of microfinance , in my opinion.

During my borrower visits, I found myself asking each borrower the same set of questions:

-How much does a cow, a goat and a sheep cost to purchase?
- What costs are involved in finding the seller?
- How much does it cost to fatten them up for resale?
- How long does that take?
- What is your Kiva loan term?
- How much interest are you paying on your Kiva loan?
- Do you sell all your livestock at the end of the “fattening season”?
- What do you use the profits for?
- What other sources of income do you have?
- What costs are involved in finding the buyer for resale?
- Do you use the cows for milk & cheese sales? If so, how long is the cow productive?
- How much do you sell milk & cheese for? Are travel costs involved in selling this?
- How much do you resell your cow, goat and sheep for at the end of “fattening season”?
- Do you breed any of the livestock?

As the wheels turned in my head, I grew curious - could a cow beat the Dow?

Before I reveal the answer based on my findings, it is important to understand how the livestock business works for a Kiva borrower in Kyrgyzstan. So, in the universal language of Emoji’s - here is the business cycle of a typical Kiva borrower in Kyrgyzstan (let's call her Zamira) who borrows $2,000 USD for a 12 month loan term:

After taking into account the appropriate risk factors, interest rate, exchange rate fluctuations, inflation, etc - this is what my financial model told me:

Your Kiva loan to a borrower in Kyrgyzstan is not only giving them access to capital - it is also giving them access to a 30.1% return on their investment! When compared to some of the worlds most prominent indexes over the last two years, your Kiva loan has a financial impact that provides borrowers with a return on investment 11 times more than the Dow Jones Industrial Average, 9 times more than the S&P 500, 7 times more than NASDAQ!

Furthermore, with a few simple reinvestment decisions and business planning, Kiva borrowers in Kyrgyzstan can earn up to a 78% return when they invest their Kiva loan into the livestock business! Over the next couple of weeks, I will be sharing my “Can a cow beat the Dow” financial model with Bai Tushum staff and exploring opportunities to provide Kiva borrowers with some simple business tips that could help them maximise profits and tap into the potential of this lucrative industry!

I am excited and hopeful that repeated Kiva loans from Kyrgyzstan will decrease in the future and all the hardworking, gracious and inspiring grandma entrepreneurs will be so successful that they will not need Kiva anymore! Just to give you an idea of how wonderful my borrower visits have been, here are a few of my favourite moments:
Sharing laughs with Kiva borrower, Katychakan and her grandson!

Kiva borrower, Zhyldyzkan, used her Kiva loan to buy cows and goats that her husband was shepherding in the mountains when I visited

Kiva borrower, Kamila, used her loan to buy this goat as well as some fertiliser for her farm.

Kiva borrower, Nuriya!  One of the cows paid a dividend, this cute 3-day old calf!

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Good job Priya Proud of you

Awesome stuff, just watch out for herd mentality!

AMAZING!!! I love it!

This is a wonderful breakdown for those of us who are challenged by numbers and extrapolation. You've shown how a decision to fund borrowers in this area can pay back big time, even after the KIVA portion is paid back. Thanks so much for this!

Priya you're a star ******** An absolute legend!!!!! Thanks for what you are doing out there in the field. You are inspiring!!!!!!!!!!!!!!!!!!!!!!!! Loved the read. So informative and easy for me to understand being a non finance type. It is the best Kiva blog I have read. I think you didn't add labour costs in your equation but close enough I guess. I wish I had your experitse as I would like to do this work. Thank you for clarifying things for me and many others out there. I might C&P your comments on my team's forum.

Thank you so much for writing this beautiful summary; very glad to know that the loan has made such an impact on their life!

Priya, I am very interested to know how the Kyrgyzstan borrower then manages her milking cow and calf... Does she leave the calf with the mother, and for how long? Or does she separate them soon after birth, and then what does she feed the calf? I've been talking to western farmers and even the organic farmers take the calves from the mothers within 7 days or less. Most calves are then given formula, the lucky ones get cow's milk in a feeding bottle system. I think this is horrible. And the dairy cows in a factory farm live an average of 5 years (out of 20). I think the heartbreak of losing baby after baby is a big part of this. I have been able to find only 1 farmer who leaves the calves with the mother for 3 months. Her farm is run as a cow-share with 7 families supplied with milk from 1 cow (who is also feeding her calf). I can give you the link to my blog post with more details if you wish. So, I'm wondering if I can get more data on what works to produce a profitable milk yield, but is still more humane for the calf and mother - wondering if that happens in less-developed countries? That's where you come in! If you could please ask these farmers and let me know I would VERY much appreciate it. I would also be very interested in their reasons as to WHY, or why not, they follow certain mother-calf practices. Thank you!

Thank you Priya for this interesting information. It makes me happy to be a Kiva lender and I wish I had the opportunity to become a Kiva fellow........ Best wishes from Switzerland, Antonia

great to see my humble $25 (US) donations/loans are actually DOING something! I have shares in some livestock in Kyrgyzstan...may you travel safely to your next assignments...

You are an amazing young woman & a role model for women all over the world! I plan on using your inspiring story to encourage the young underserved women we work with around the San Francisco Bay Area. I almost stopped donating to KIVA because of the time commitment (I'm busy running a family foundation) but the stories behind the loans and the difference it makes it too great to ignore. Thank you for reminding why microloans are so important. Kind Regards

Great to see an "impact" story with some actual numbers in it. And since I do a fair amount of lending to Kyrgyz borrowers, I appreciate this post greatly!

Priya, You're amazing!! Not only have you wonderfully humanized Kiva loans and uncovered the cow vs. Dow surprize but you've done so in a manner that is both pleasing to the eye and ear. We needs lots more of you. If you ever visit Kiva HQ in SF please let me (and Taylor Whitfield) know as I'd love to meet you. Running across your blog is the best thing that happened today.

This is absolutely brilliant! Thank you for sharing this. It has greatly enhanced my satisfaction of being a part of these loans. I am not a student of business but I really am beginning to understand the power of what we are doing through Kiva. I appreciate you sharing your expertise!

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Born and raised in Fiji, Priya moved to New Zealand for University after which she joined Deloitte Auckland as a Graduate Audit Analyst in July 2012. Currently a Manager with Deloitte, she works with an exciting portfolio of clients that ranges from Airlines to Apple Growers! After qualifying as a Chartered Accountant, Priya spent four months on secondment to Deloitte London where she conjured Microsoft Excel magic on weekdays and embraced her inner nomad with trips to Europe on weekends. Having explored thirty countries in the last six years – travel is one of Priya’s four passions – business, food & social entrepreneurship being the other three. Priya is the CEO & Founder of two social enterprises – Mentor me Fiji Foundation which has been working with orphans to foster academic development in Fiji since 2013; and most recently, Karma Collective – an organisation based in Auckland that brings corporates, young professionals and university students together to solve business problems for developing world entrepreneurs, at zero cost to the entrepreneur. Having grown up in a developing country, she is very excited to be a part of the 30th Kiva Fellowship class and looks forward to seeing first-hand, the impact of microfinance in the field.