Microfinance, Kiva and You

Although many people in these days of recession have all they can do to look after themselves and their families, there are always some with a bit to spare, and many of those want to help others.

There are many ways to help, and I would never rate one above another. Anything we can do for those in trouble is valuable. What I would like to do is introduce another way to help that many people may not be familiar with.

Some of you may have heard the term “microfinance”. Simply put, it is the process of providing very small loans to people, often in the developing world, who would not qualify for a loan through a regular bank. These people, many of them women, have no collateral, but want to get started in a small business.

The idea is believed to have started in 1976 with the Grameen Bank in Bangladesh, which still provides microcredit to impoverished women there. It has helped many families climb out of desperate poverty.

Very interesting, you are saying (or maybe not), but what does this have to do with me? I’m not a bank.

Well, I was looking into a way to help people that would not cost more than I could afford, and I came across www.kiva.org. This organization allows individuals to get involved in microfinance.

It works like this: a woman in Ghana wants to borrow $500 to expand her food stall. Kiva organizes loans of $25 each from 20 different lenders to make up the amount, provides the money, sets up a repayment schedule, and collects the payments. Their default rate is 2.1%.

You, as the lender, do not make any money. The interest charged goes to run the organization. But when you get your $25 back, you can lend it to someone else, and use the same money to help several people.

If you have $25 to spare, give it a thought. You get to choose the people and projects your money helps, and receive reports on their progress. Who knows - you just might change some lives.