Have you heard of Kiva? It’s revolutionizing the way we lift people out of poverty. Harvard Economist (and author of The End of Poverty) Jeffrey Sachs says that micro-lending is the single most viable method to end poverty in our lifetimes.
I’ve made numerous loans through Kiva for years. They have always been paid back extremely quickly, and then the money is back in my account to loan again. Most of the loans I have made have been for $25 — this money is pooled with other micro-loans from people around the world, to loan the recipients a few hundred dollars to start a business, buy a sewing machine, or a cow or chickens, or supplies to craft or resell. It’s an amazingly simple way to let someone become self-supporting and support their family, rather than a charity handout. It’s also much more empowering for the recipients.
In fact, the rate of repayment for micro-loans in the developing world is much, much higher than the rate of repayment for traditional credit in the first world — an amazing 98.94% repayment rate!
Now Kiva is making an amazing offer — new lenders can sign up through existing Kiva partners like myself — and then BOTH Kiva lenders get $25 deposited in their account, for free, to loan out. What is there to lose? It’s a win-win-win situation, for the lender and recipient and Kiva.
My last loan was made to Esther (47), in Nairobi, Kenya. My $25, plus other lenders, gave Esther a total $900 loan that she used to buy a stock of clothing to resell, and raw material to make hair wax that she then sold. And the loan was 100% repaid. Esther has been running her business for 12 years, and used this loan to expand her business to support her family.
And in case you’re wondering, 100% of every dollar you lend on Kiva goes directly towards funding loans; Kiva does not take a cut. Furthermore, Kiva does not charge interest to their Field Partners, who administer the loans.
I have also made loans to Sok in Cambodia, a 50-year-old woman who farms for a living and earns $1.50 per day. Sok’s husband is a motorcyle taxi-rickshaw driver and earns $3 per day. Her requested loan of $500 went to buy a new motorbike for her husband, to earn the family additional income so that they can make repairs to their home. I’ve also made loans in The Democratic Republic of Congo and Pakistan. I re-loaned my Kiva credit, from repayments of past loans, to the group Fe Y Esperanza in Nicaragua, a communal bank of 11 women who have various business ventures; and the Mungu Tubariki Group in Tanzania.
Now, with the money paid back from previous loans and the $25 that Kiva credited me via this promotion, I have just made a new loan — my first loan in India, where Kiva just announced its newest launch! I have often wondered why Kiva did not have loans available in India; it’s because determining how to work in India wasn’t easy. In particular, Kiva loans are subject to Reserve Bank of India regulations that require loan funds sent to non-government microfinance institutions to remain in the country for at least 3 years.
Therefore, any Kiva loan made within India won’t be paid back for 3 years; the Kiva Field Partners will simply hold on to loan funds for the minimum 3-year term before sending repayments back to lenders. The borrower you select will probably repay beforehand, in which case your funds will be recycled to help other local borrowers, maximizing your impact before your funds are returned. That is perfectly fine with me — and so I made my new loan to the Sri Jaggannath Group, a cooperative of four women in Cuttack, Odisha where I visit every time I go to India, and the region where my children’s home that I support is. These women have a general store, and want to use the loan to expand their inventory and increase their stock of items. In the last year, the shop was relocated due to road construction and the move has hurt business. I hope that my Kiva loan helps!
Give,” said the little stream, as it hurried down the hill; “I’m small, I know, but wherever I go the fields grow greener still.”