Sponsoring Small Businesses to Help the World’s Working Poor
A San Francisco company has taken the idea of microfinance, which has become popular through the Nobel Prize winner Muhammad Yunus, and upgraded it for the Web. Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can “sponsor a business” and help the world’s working poor make great strides towards economic independence.
Thus Kiva is using the power of the internet to facilitate one-to-one connections that were previously very expensive. The individuals featured on the Kiva website are real people who need a loan and are waiting for socially-minded individuals to lend them money.
Sponsoring Small Businesses to Help the World’s Working Poor Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you’ve sponsored. As loans are repaid, you get your loan money back. From there you can cash out, or lend it out again to another person in need.
Kiva, which means “agreement” or “unity” in Swahili, would allow people with a little bit of extra cash to use their credit card or the online money transfer company, PayPal, to lend directly to African entrepreneurs. Kiva got its start a little more than a year ago in Uganda, where it forged partnerships with local microfinance institutes so that each business would be vetted and approved before being posted on the site. It has given out more than $400,000 in loans. And what started in one small village in Uganda has spread to 11 other countries just in its first year.
Here you can see a video on the project. Since everything has more than one side, there are also people criticizing the approach of Kiva by pointing out that other microfinance organisations take loan interests to cover the costs and that Kiva with their interest free loans is destroying the local banking organisations.
