03 May 2006

Social Entrepreneurs: Kiva's Peer-to-peer Microfinance Network

My growing interest in microfinance and microcredit models got a boost recently when a friend turned me on to Kiva, a web site that lets people like you and me connect with small businesses in the developing world. Modest loans of $25-100 go a long way in countries like Honduras, Bulgaria, Uganda, and Cambodia.

The site is easy to navigate and well-organized around businesses and their status: In Need, Active, and Raised. Through brief profiles, you can quickly get a sense of the entrepreneurs and their business ideas. Status updates, including entrepreneurs who have paid back their loans, are also available through the site.

Take Elizabeth Omalla (pictured), for example, who received and paid back her $500 loan to start a business as a fishmonger in Tororo, Uganda. Through her loan, Kiva reports, Ms. Omalla got access to a better market and the profit enabled her to buy goats, cow, pigs, chicken and send her children to school. She writes in one journal entry,
I am a widow with eight Children and other three relatives who stay together with us in our home. Altogether, twelve (12) people have benefited from this money of the business. I have been dealing in fish mongering. I started by doing retail business until when I got a loan money that promoted me to a wholesale trader.

Kiva collaborates with local organizations to screen entrepreneurs, assess their businesses, and administer your loan. According to the website, Kiva claims its partners average an historical repayment rate of over 96 percent.

By choosing a business on the website and lending money through an online transfer (credit card or PayPal), investors sponsor a business, thereby helping the world's working poor get on the ladder of economic improvement. Optional monthly email updates during the course of the loan, usually 6-12 months, keep you informed about the progress of your loan and the small business you have sponsored. Finally, as loans are repaid, you get your original loan money back or you have the option to turn it into a donation.

Kiva is the brainchild of Matthew and Jessica Flannery. During several month's work in rural Kenya, Tanzania, and Uganda, Jessica, then on staff with Village Enterprise Fund (VEF) and Matthew, a filmmaker, were "struck by the success of hundreds of small businesses started by VEF, the incredible impact of those businesses on their communities, and the vitality and potential of those businesses' entrepreneurs."

Time to take that $25 per week we spend on getting caffeinated over The Economist and turn it into micro-lending power!

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1 comment:

Anonymous said...

Thanks for the support Scott! Elizabeth is one of my favourite success stories. It's so encouraging for us when we see enthusiasm for our loans spreading acrosss the internet.

Fiona Ramsey
Customer Relations and Operations Manager