Kiva.org – Microlending on the Web
Thursday, 27th October 2005 at 1:10 pm
Kiva.org is described as a unique Not for Profit organisation to enable individuals to make personal loans to micro-enterprises in developing countries. Now it has launched its Web site that opens the Internet to people looking for a personal, high-engagement means of taking steps to eradicate poverty in developing countries by lending money directly to small businesses.
US-based Kiva.org’s first country of focus is Uganda, where the Internet is available even in poor rural areas.
Lenders may make loans in increments as small as $25, and can expect to receive repayment, without interest, at the end of the six-12 month loan term. Since Kiva’s source of capital is charitably minded individuals, it is able to provide more flexible and economical loan terms than traditional financial institutions.
To date Kiva has funded 13 small enterprises in Uganda, and two have already repaid their loans in full. The enterprises Kiva is working with are requesting loans averaging $500; lenders are loaning between $25 and $100.
The lender simply goes to www.kiva.org, registers in a password-protected section, browses the listing of enterprises requesting funding, and chooses one or more businesses. Loans are made via PayPal (similar to BPay in Australia). Lenders can stay abreast of the progress of the businesses via blog-like updates posted on the Kiva site, and may also correspond with business owners through the Kiva partner representative in Uganda.
Kiva was co-founded by Matthew and Jessica Flannery, a couple based in Californian with connections to Stanford and Silicon Valley. While working in Uganda, Kenya and Tanzania in 2004 — Jessica with Village Enterprise Fund (VEF), and Matthew as a film maker — they saw first-hand scores of entrepreneurs being helped by VEF, and hundreds more wanting to start their own enterprises.
The couple began developing the concept of an Internet-based fund where socially minded, average-income individuals could loan to these entrepreneurs, and spent the next year researching and creating a business plan.
Matthew Flannery says they started Kiva because they saw loans as a very personal and sustainable way to help entrepreneurs across the world.
He says when you loan to someone and get paid back, you get proof that a business has succeeded — and you are more likely to loan again.
He says Kiva’s goal is to reduce poverty in developing countries by giving entrepreneurs the ability to build their businesses through flexible loans with six- to 12-month terms. Kiva allows individuals to act as a “micro VC” by loaning directly to entrepreneurs with feasible business plans.