Non-Profit Kiva Offers Online Microfinance
Microloans to Entrepreneurs in Developing Countries Ease Poverty
Jan 23, 2009
With as little as $25 anyone with access to the Internet can sponsor Habil Seferov in Azerbaijan who raises cattle to support his family. He requested a loan of $1,200 to purchase more calves. The Kiva site shows how many people have contributed to Mr. Seferov's loan, which is disbursed through Agroinvest Creditunion (a Kiva field partner). Mr. Seferov will repay the loan over 15 months.
How Kiva Was Started in 2005
It makes a big difference in people's lives if they can sleep on a mattress instead of a dirt floor, if they can afford sugar in their daily tea and buy fresh fish for their families a few times a week. This is what Jessica Flannery —- an MBA student at the time — learned during a visit to Uganda, where she met entrepreneurs who used small grants from Village Enterprise Fund to start a business. After she heard Dr. Muhammad Yunus (founder of Grameen Bank and winner of the Nobel Peace Prize) speak at Stanford University, she wanted to explore a career in microfinance. Jessica and (her husband) Matt Flannery launched Kiva in 2005, the Swahili word Kiva meaning "unity' or "concord".
How A Microloan With Kiva Works
Prospective lenders browse profiles of entrepreneurs on the Kiva site and choose someone. Lending is done via PayPal or by credit card. One of Kiva's microfinance partners receives the funds and passes the money on to the entrepreneur. Microfinance partners also provide assistance and training to borrowers and set up a repayment plan. This information is posted on the website and/or e-mailed to the original lenders if they permit to be contacted. When lenders get their money back, they can support someone else, donate to Kiva.org to cover operational expenses, or withdraw their funds.
Kiva is an "eBay for microfinance"
Kiva connects the donor directly to the beneficiary similar to child sponsorships but at much lower cost. Kiva is basically an "eBay for microfinance," Premal Shah, president of Kiva says. Shah convinced PayPal to offer free payment processing to Kiva. This is a godsend in the world of microfinance, where even small fees are high for the recipient countries. Loans are processed through nongovernmental microfinance groups in the region. Shah calls them "bankers on bicycles". They deliver the money to borrowers in the local currency and collect payments. They charge an interest rate of 20 percent, on average, which is much lower than traditional rates in the developing world.
Excellent Press Coverage Helps Kiva Grow
At first blogs like Daily Kos wrote about Kiva, magazines followed, and then Kiva was featured as one of three stories in Frontline World. After Bill Clinton praised Kiva in an interview with Keith Olberman and Oprah introduced Kiva in her show, it experienced tremendous growth overnight. "Frontline on PBS, that brought us to a 10-X level of growth (...)," Jessica Flannery said. "And Oprah, that was maybe 10-X again overnight."
Microfinance Movement Grows Despite Recession
In October 2008 Kiva marked its third anniversary, shortly after the 50 millionth dollar was loaned through Kiva. Kiva Gift Certificates have become popular during the holiday season and the organization facilitated a record $3,827,400 of loans in December 2008.
In 2007 friends of Kiva started Kivapedia, an attempt to create a complete reference to Kiva related facts in the fashion of Wikipedia. Kivapedia is written collaboratively by people around the world. The effort reflects how an excellent idea has developed into a grassroots movement.
Check out Kiva.org. and Kivapedia
Microfinance in the U.S. Helps Small Businesses Grow
Creating a World Without Poverty
 |
 |
 |
 |
 |
