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Micro Finance for a better world


Back in 2008, I made a very small investment of just $50 in an international finance company called Kiva, and over the years I’ve topped up my capital input to around $ in a million

It’s the best investment I’ve ever made and today is worth the princely sum of – $241. Well, that’s how much I’ll get if I pull the funds out, which I’m not planning to do any time soon.

Along the way, I’ve been a finance partner in 29 very small business endeavours across 20 different countries, from Azerbaijan to Ghana, Nicaragua to Sierra Leone, Cambodia to Iraq.

My money has been loaned, repaid and loaned again. I’ve loaned out around $850 over the years and I reckon my money is working harder than any investment I’ve made before or since – and most likely, so are the loan recipients.

The latest loan I’ve made was for Francisca, an East Timorese woman who has run a small kiosk in Dili since 2009, selling slippers, candies, sugar, coffee, detergent and soft drinks. She’s applied for a loan of 1,000 USD to build up her stock.

The loan was disbursed through Tuba Rai Metin, a local community development agency established in East Timor in 2001 with support from the UN Save the Children fund.

Lenders come from an assorted group of Kiva members who typically throw $25 or $50 into the pot. For Francisca’s loan, I’m joined by Gert, a teacher from Wurzberg in Germany, Tony, a computer consultant from Washington DC and Jason, a lab technician from Winnipeg in Canada – plus another couple of dozen members, most from developed nations.

Kiva copped some flak a few years ago because the process is more complex than it appears. My $50 probably won’t go direct to Francisca, but to Tuba Rai Metin, who will have probably already funded her loan by the time the money gets there and will send my money to a new lender. But that’s OK with me; it was Francisca’s story that prompted me to fork out my dosh.

US entrepreneur Jessica Jackley and her then-husband Matt Flannery founded Kiva in 2005.

The pair were inspired by Nobel prizewinning Bangladeshi economist Muhammad Yunus, who founded Grameen Bank in 1983 to provide low-interest, unsecured loans to impoverished people in rural areas – mainly women – to help them build small businesses.

These ‘micro-credit’ loans generally involve small amounts of money, to be used for self-employment projects that can generate income. Repayment is usually flexible and often facilitated through community development groups.

Banks don´t usually loan small amounts to poor people with little collateral – and local private moneylenders were often ruthless criminals charging exorbitant interest.

Grameen Bank is owned by its 8.3 million borrowers.  Since 1983, it has loaned around $15 billion USD, financed the building of around 700,000 homes, and funded higher education for around 12,000 female and 40,000 male students.

Jackley grew up in middle-class Pennsylvania and visited Haiti with a church group as a high school student where she was struck by the hardship of Haitian children her own age.

Graduating with a degree in philosophy and political science, she worked at Stanford Graduate School of Business where she heard Yunus talk.

A few months later, Jackley quit her job, travelling to villages in rural Kenya, Uganda and Tanzania where she worked with a non-profit called Village East Fund who gave $100 grants to poor entrepreneurs. She surveyed villagers who had received loans to find out the changes they had made to their lives, and wrote the stories of the people she met.

“As Dr Yunus had described, these were stories of dignity and hope,” she told a Stanford audience in 2009. “They were not what I had expected.”

After sharing the stories of the people she surveyed with friends and family and husband Matt (who joined her in Africa for part of her three month trip), Jackley was flooded with offers of loans for the people whose stories she had shared.

“People wanted to be engaged in specific ways, they didn’t say, what a nice story, I’ll go write a cheque for a big non-profit.”

Jackley and Flannery returned to the US with a great idea – to create a website allowing  individual donors to connect with and lend money to small businesses in the developing world. Over the course of the loan, donors receive updates about the sponsored business.

For me, Kiva is a wonderful way to extend a helping hand. It’s truly an investment in a better world, for someone who lives a long way from my world.

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