KIVA is an organization that arranges microloans for people in developing countries who are entrepreneurs but don’t have the usual collateral that regular banks need before they will lend money. It’s the old adage of “you have to have money in order to be able to borrow money.” Banks are in the business of making lots of money for their shareholders and many are not interested in being socially responsible, not unless it enhances their corporate image. The idea of offering microloans originated with Muhammad Yunus, an economist from Bangladesh, (now a Nobel Prize winner), who offered his first USD$27 to a group of women. Often times these people would have to go to loan sharks to borrow money at exorbitant interest rates and then would have a tough time paying them back, leaving many of them vulnerable to physical danger. Entrepreneurs don’t have money to start/grow their businesses and some of the microloans can be as little as a few dollars which is very little money for most of us who live in the developed world (an evening’s dinner at an average priced restaurant) but would make a world of difference to someone whose daily wages could be as little as $1 per day. I remembered reading about Yunus more than 20 years ago and wished I could do something like this. I also read that the other banks practically laughed at the idea of lending to people who have nothing but the payback rate of most of the microloans is about 98%.
Okay so where am I going with this? There is a point, and a very good one at that. Last Christmas I got one of the greatest Christmas gifts that I could think of. Sunita explained it as a "Christmas gift for you but you can't use it but I know you'll love it." Well Sunita, Sharm, Subhadra and Sophie pooled their money together and bought us $125 in KIVA credits. We could use the credits to lend as little as $25 to one person or as much as the whole amount to one or several people in $25 increments. We looked over the profiles of the borrowers and decided to offer $75 to Esther from the Philippines and $50 to Yaakoub from Lebanon.
Within 2 weeks, Esther had already done her renovations to her rooming house but has not yet started repaying the loan. As of today, Yaakoub has paid back 8% of his $50 loan. I will wait for a few months to see how it goes and will definitely add some more funds to what I already have. This is a great idea so if you have as little as $25 to spare, please think about doing something for someone who is truly less fortunate than you and in whose life you can make a huge difference. Here is the website again. KIVA