Wednesday, July 8, 2009

Ready to invest in people?

Microfinance is the supply of small loans and basic financial services, enabling poor people to invest in tiny businesses, to accumulate assets and raise household income and welfare.

KIVA is the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe. Kiva's platform allows internet lenders to connect directly with entrepreneurs served by microfinance institutions ("Kiva Field Partners") worldwide.

The people you see on Kiva's site are real individuals in need of funding. When you browse entrepreneurs' profiles on the site, choose someone to lend to, and then make a loan, you are helping a real person make strides towards economic independence and improve life for themselves, their family, and their community. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates and track repayments. Then, when you get your loan money back, you can relend to someone else in need.

The Kiva Fellows Program offers individuals a rare opportunity to travel abroad and witness firsthand the impact and realities of microfinance, by working directly with a host microfinance institution (MFI). The Kiva Fellow is an unpaid, volunteer based position designed to increase Kiva's impact and to offer participants a unique insider experience.

We enrolled our very young grandchildren and divert to Kiva part of the money that might otherwise be spent on toys and junk. Grandma and Grandpa make the choices now but the children will assist and eventually assume control of the lending. This is not big business or an investment scheme. We hope the young ones will grow up with appreciation for what they enjoy in Canada and feel empathy for those less fortunate. The oldest little one is only three but he takes an interest in looking at the people he is "helping." He certainly doesn't understand much about the whole process but he can relate to the idea that poor people need assistance so they can grow food for their own families.

As time goes on and we add to each child's Kiva fund, the kids will decide which "entrepreneur" they want to assist. Loans are small, usually $500 to $1,000 and single Kiva contributors donate $25. For example, last year a young farmer in Peru needed $250 to buy fertilizer for his small plot. Ten Kiva supporters from Canada and the USA paid $25 each and were repaid over the following 6 months. A woman in Jinja, Uganda, borrowed $900 to buy materials for her sewing and mending business. The loan was funded by $25 each from people in Canada, USA, Australia, Taiwan, Germany and Sweden. That money was lent in February and by July, 81% has been repaid.

Microfinance has been growing hugely around the world. Kiva is even starting a pilot project in poor regions of the USA. The system is not without critics as well so people should stay alert if they become involved. Our family heartily recommends the Kiva experience.

Update, July 11, 2009:
Kiva funds raised - $80,934,410 Entrepreneurs funded - 196,796 Repayment rate - 98%

Update, August 7, 2009
Kiva funds raised - $85,384,785 Entrepreneurs funded - 208,767 Repayment rate - 98%

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