Kiva – Just Wow!

Kiva.bmpA very, very indirect link to mobile, but head on over to Kiva right now and check it out if you pride yourself on having any kind of human values.

Microfinance has really exploded in the last few years, ever since the Grameen Bank pioneered the concept. Read more about Nobel Prize winner Muhammad Yunus here, but the basic concept is lending tiny amounts of money to the poor to enable them to start or expand businesses.

One popular idea has been to lend people money to buy mobile phones that they then rent out by the minute in developing countries to passers by to make calls.

This is not charity though – they are expected to repay the loans and 95%+ of the funds are paid back, which is much higher than say, credit card lending or “proper” business loans.

Microfinance is a truly great idea, empowering the borrowers to raise themselves out of poverty and¬†as applicants are vetted carefully, represents little risk to the lender. Very often the borrower’s community will also monitor repayments and ensure obligations are met. After all, the community doesn’t want to lose access to this credit.

Until now it’s been hard for ordinary people to lend money, certainly on an active and involved basis. You could buy shares in a microfinance bank, but you’re still very remote from the entrepreneurs you’re trying to help.

This is where Kiva comes in. You visit their website and sift through proposals from aspiring entrepreneurs in places as far flung as Bangladesh or Bulgaria. You can see how much money they want and what their business plan is. You choose one you like and lend out money in increments of $25.

Once the cash has been raised, you get the investment repaid over the agreed period (normally a year) and can opt in to get email updates on progress. All the transactions are done by PayPal, who uniquely, provide their services free.

So far, Kiva is beating the industry average and has 100% return of funds they have lent out.

Give a woman a fish and she eats that day. Give a woman a fishing rod and she eats for life. An analogy that I’m sure isn’t lost on Elizabeth Omalla (pictured above) a fish monger from Uganda and successful entrepreneur, thanks to Kiva.

So head on over to Kiva with your $25 and change someone’s life.

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