Written by Fran Molloy
More than a quarter of a million people have signed up to donate money to small businesses in developing countries through a website that has the potential to change the world.
Something special is happening on the internet. There´s a growing connection between the world´s more fortunate – those in the West with jobs and homes who never go hungry – and poorer people who have no social security, who struggle to feed their families and for whom life is a lottery.
In 2005, Matt Flannery and his wife Jessica founded Kiva, an internetbased not-for-profit website that links individual donors with people in developing nations needing a lowinterest loan to start or grow a small business or a home.
Loan amounts start at just US $25 – and the money is usually repaid within a year, when donors can choose to withdraw the funds or loan them to another Kiva loan applicant.
Three years on, Kiva has attracted more than 250,000 donors who together have loaned US $25 million to nearly 40,000 people in developing countries, helping improve their lives.
The beneficiaries are people like Grace Ayaa, in Uganda, raising seven children (four of her own and three orphaned by civil war).
Her peanut-butter making business supports her family and some years after fleeing her war-torn northern home, she has bought some land, she is building a house and educating all of her children, thanks to a Kiva loan of $475 that allowed her to grow her business.
It doesn´t take much to change someone´s life.
One entrepreneur featured on the site last month was Ifeanyi Abanim, a 28-year old Nigerian father of one who has been selling yams at the market in Benin City since 2004.
He´s applied for a loan of $700 to buy more yams and has promised to repay the loan in full in eight months.
When I checked last, ten donors had raised $300 of the necessary money for Ifeanyi.
Ifeanyi´s donors included Doug, a social worker from Missouri in the US; Francois, a French doctor; Catherine, a Canadian engineer; and Jim, a Minister of Religion from Sydney, Australia.
Kiva is based on what economists call "microcredit" – very small amounts of money loaned at a token interest rate, allowing poor people to set up a small market stall or buy seeds to grow food or equipment to make goods for sale.
Microcredit has become increasingly popular with major charities – but it´s not charity, it´s a loan. The borrower gains a new dignity when they repay their loan – and the charity gains the practical advantage of receiving back more funds to make another person´s dream come true.
Few finance options were available to these people in the past; banks don´t loan small amounts to poor people with little collateral and local private moneylenders are often ruthless criminals charging exorbitant interest.
The international microcredit movement began in 1976 when Bangladeshi economist Muhammad Yunus went to some of the poorest homes in the village of Jobra and loaned around US $27 to 42 women (around 64c each), so they could buy bamboo they used to weave furniture.
The group were soon able to repay the loan and all went on to become independent business owners. Soon after, Yunus set up Grameen Bank, specialising in small loans to groups who act as coguarantor for each other.
By mid-2007, the bank had loaned US $6.3 billion and had a very high (98 percent) payback rate.
Yunus was the 2006 Nobel Peace Prize winner and micro-credit adopted by most major charities as an effective and dignified program to help the poor.
When Matt and Jessica Flannery visited villages in rural Kenya, Tanzania, and Uganda in 2004, they were struck by the positive impact on communities made by hundreds of micro-credit financed small businesses.
The couple returned to the US with a great idea – to create a website that allows individual donors to connect with and loan money to small businesses in the developing world.
Kiva links donors to existing microfinance organisations in any of 42 countries. Over the course of the loan, donors receive email updates about the sponsored business – including photos and loan repayment progress.
But the individual connection sparks something deeper through the emailed progress reports.
Another of Ifeanyi Abanim´s donors is Kay, an American who lives in Maryland. She explains, "I can think of few other things as meaningful as making these loans. The pictures and stories draw me in, enrich my life, and open my eyes."
