Micro Finance- & Credit Industry Consultants
Kiva, a US-based company, initiated an innovative bussiness model that applies Internet technology to bring financial services to the poor. It’s creation of an online marketplace for lenders and borrowers has led to explosive growth of over 30% per month since the websites founding in 2005.
In essence Kiva lets you lend to a specific entrepreneur in the developing world - empowering them to lift themselves out of povery.
Their platform enables ’peer-to-peer’ lending through which Kiva.org puts potential ’social investors’ in touch with small businesses in the developing world. Kiva lets lenders connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, people can ’sponsor a business’ and help the world’s working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), the lender can receive email journal updates from the business he/she has sponsored. As loans are repaid, the lender gets his/her loan money back.
Kiva partners with existing microfinance institutions. In doing so, they gain access to outstanding entrepreneurs from impoverished communities world-wide. Their partners are experts in choosing qualified borrowers; however usually short on funds. Through Kiva.org, these partners upload their borrower profiles directly to the site so lenders can lend to them.
The process involves 4 very simple steps:
Step 1: Choose a business - The businesses on their site are always changing. They are being uploaded by their microfinance partners around the world. One can find a new business on the home page or on the Businesses ‘In Need’ page.
Step 2: Make a loan - When one has selected a business, he/she can make a loan using his/her credit card (via PayPal). A loan can be as little as $25 at a time. Checking out is easy and safe because of PayPal.
Step 3: Receive journals and payments - Periodically, the lender will hear back from the business he/she sponsors. Partner representatives (often loan officers) write directly to the website to keep one informed on the progress of the business. If one chooses, he/she can receive these via email.
Step 4: Withdraw or re-loan - When a lender’s Kiva loan is repaid, he/she can choose to withdraw his/her funds or re-loan to a new business.
Due to incredible press attention (The Oprah Winfrey Show, NBC’s Today Show, and President Clinton’s book “Giving”) Kiva’s new service is experiencing record traffic and they are working overtime to add new businesses from all over the world everyday.
Visit their site at www.kiva.org and be inspired on what is possible if you think “out of the box.”
The Norwegian Nobel Committee has awarded the Nobel Peace Prize for 2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights.
Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh, but also in many other countries. Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.
Every single individual on earth has both the potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.
Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male.
Yunus’s long-term vision is to eliminate poverty in the world. That vision can not be realised by means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, micro-credit must play a major part.
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