July 28th, 2006 - Micro credit at Kiva
I have long been a fan of micro credit (or microfinance), ever since first learning of it in college (not in a college class, however, as far as I can recall). In graduate school, I ran across some books about the Grameen Bank and became even more enthusiastic. However, there’s no way for the average American to be involved, unless you are able to work or volunteer for a micro credit agency. (Which, actually, a friend from college does!)That is, until now. Kiva is a way to be involved in 3rd world micro credit! “Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can ’sponsor a business’ and help the world’s working poor make great strides towards economic independence.” Your committment could be a specific amount for one person, smaller amounts divided amonth a number of businesses (diversification!), or an entire loan for one person.
I’ve already comitted to $100 in loans, divided among 3 businesses. Once the loans are funded and dispersed, we are to receive a regular entries in their journals (this link is to actual journal entries) about how they have used the loan and what difference it is making.
Kong Komtia general store Household Items Store in Ban Tum Poum District, Cambodia. Komtia’s loan has been fully funded and dispersed already!
Maria Guadalupe Escobar Food Production and Sales in Casada, Atlantida, Honduras. I haven’t gotten an email indicating this, but according to the page, this loan has also been fully funded!
Esther Tumuheirwe Seamstress in Kampala, Uganda. Ditto, this one also fully funded.
You can browser their businesses to choose specific people you wish to sponsor. I am most interested in supporting women, especially those with children. You might focus on type of business, gender, location, families, size of total loan (I’ve seen from $150 - $1875 so far), or just choose randomly. I’ve looked at the site a couple times this week, and have seen businesses come and go, so if you don’t see something you want this time around, come back! You might loans already raised to see other unique businesses. For example, musicians have received loans! (Unfortunately, you can’t search by type of business.)
Unfortunately, although you are making loans, you don’t get any interest on them, so this is not an investment (unlike the American people-to-people lending website Prosper where you do earn interest). It’s not a charity, either, since the money is actually loaned and repaid. I wish we got some sort of interest, even if it was miniscule. But, as a first generation way to be involved in micro credit, I’m taking it. Although the loan is repaid over a specific period (6-18 months typically), you do not receive your money back until the entire loan is repaid. At that point, you can either take your money back, or reinvest it in other businesses. It’s a strange little area inbetween investing and charity. Their are no personal financial benefits (you could even say it’s a negative since I will not earn any interest on this money now). But there are definite non-financial benefits for me. It’s the old adage “Bring someone a fish, feed them for a day. Teach someone to fish, feed them for tomorrow.” But brought further, “Loan them money to increase their fishing intake and feed and educate their entire family for the future.” (Or something more elequent than that!) The journal entries already show families who have been able to build better houses!
I suspect that in another 3 months or so, I will invest another $25. Otherwise, I’ll invest, then have to wait an entire year before I can invest again!
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April 3rd, 2007 at 9:41 am EDT
[…] See post on Kiva for more info on microcredit. […]