Monday, 27 February 2006
Key Principles of Microfinance
The Consultative Group to Assist the Poor (CGAP) is a consortium of 31 public and private development agencies working together to expand access to financial services for the poor, referred to as microfinance. These principles were developed and endorsed by CGAP and its 31 member donors, and further endorsed by the Group of Eight leaders at the G8 Summit on 10 June 2004 (Sea Island, Georgia, USA).
- Poor people need a variety of financial services, not just loans. In addition to credit, they want savings, insurance, and money transfer services.
- Microfinance is a powerful tool to fight poverty. Poor households use financial services to raise income, build their assets, and cushion themselves against external shocks.
- Microfinance means building financial systems that serve the poor. Microfinance will reach its full potential only if it is integrated into a country’s mainstream financial system.
- Microfinance can pay for itself, and must do so if it is to reach very large numbers of poor people. Unless microfinance providers charge enough to cover their costs, they will always be limited by the scarce and uncertain supply of subsidies from governments and donors.
- Microfinance is about building permanent local financial institutions that can attract domestic deposits, recycle them into loans, and provide other financial services.
- Microcredit is not always the answer. Other kinds of support may work better for people who are so destitute that they are without income or means of repayment.
- Interest rate ceilings hurt poor people by making it harder for them to get credit. Making many small loans costs more than making a few large ones. Interest rate ceilings prevent microfinance institutions from covering their costs, and thereby choke off the supply of credit for poor people.
- The job of government is to enable financial services, not to provide them directly. Governments can almost never do a good job of lending, but they can set a supporting policy environment.
- Donor funds should complement private capital, not compete with it. Donor subsides should be temporary start-up support designed to get an institution to the point where it can tap private funding sources, such as deposits.
- The key bottleneck is the shortage of strong institutions and managers. Donors should focus their support on building capacity.
- Microfinance works best when it measures—and discloses—its performance. Reporting not only helps stakeholders judge costs and benefits, but it also improves performance. MFIs need to produce accurate and comparable reporting on financial perfomance (e.g., loan repayment and cost recovery) as well as social performance (e.g., number and poverty level of clients being served).
Posted by flow Frazao on February 27, 2006 at 02:37 PM in Microfinancing | Permalink | Comments (0) | TrackBack
Thursday, 16 February 2006
Busy Busy Busy
Sorry about the light posting recently. I've been really busy not shooting people in the face.
Things with Kiva are going great. A few days ago Fiona and I sat down and had a talk with Matt Flannery (Kiva's Founder - read his blog here). Since our overall objective is to end global poverty (we aim high) the question has become a matter of how Fi and I can best affect the changes that need to happen in order to achieve that goal. Originally, we were planning on going to Africa in order to get poor Africans listed on Kiva's site, but we decided that right now the best way we can help Kiva is not by going to Africa but by staying out here a bit longer and working on server-side PHP implentation (for me) and going on a marketing blitz to sign up new Microfinancing organizations (for fiona).
So we've extended our stay in San Francisco for about a month. Luckily for us we've been blessed by a lot of people who have offered to put us up while we're working here. Right now we're staying in Palo Alto with Premal, a really great guy who's committed to pulling some major strings for Kiva. I'm not going to get into details, but if Premal can work some magic then it would truly be a hell of a thing.
Over the past week a lot has happened. I don't have a whole lot of time for proper writing, but here's a quick recap:
We signed up our first new partners on Kiva:
- The Shurush Initiative: Founded in 2003 and incorporated in 2004, The Shurush Initiative is a 501(c)(3) non-profit charity organization dedicated to improving the grave economic situation in the West Bank and Gaza through transparent microfinance and proactive employment.
- REDC Bulgaria: This organization currently focuses its efforts in and around Sliven, Bulgaria. However, through their parternship with the US Peace Corps, REDC will be able to lend efficiently to small businesses in 113 locales by leveraging the Peace Corps’ network of 178 volunteers.
- CRESP Senegal: In affiliation with CRESP in Ithaca, New York, the Senegal Ecovillage Network (GENSEN) facilitates this microcredit program for its network of 32 member villages. Committed to developing communities that are environmentally, economically and culturally sustainable, the ecovillages seek to combine the best of the past with appropriate modern technology.
- Prisma Microfinance: Prisma Microfinance, Inc. is a microfinance institution which provides micro-loans internationally, helping to alleviate poverty while providing a return to investors. Microfinance services are targeted to low and moderate income businesses and households including the provision of credit for micro-loans. (Prisma is HUGE, btw).
Instead of being focused in East Africa, now Kiva is funding entrepreneurs on three different continents. Not only is this just plain cool to say, it also means that Kiva is a lot more stable. For example, right now there's an energy crisis in Uganda which is where Kiva was conducting the vast majority of it's lending. This could have jeopardized Kiva's entire "portfolio", but now that our loans are spread out over the globe we're less likely to be affected by regional disasters.
Another amazing thing that happened is that two of Matt's childhood friends found out that they were awarded a $45,000 grant from Microsoft to help Kiva expand in the developing world! Obviously, this is incredible news, and it's opened my eyes up to some similar ideas for Fiona and I. It hadn't really occurred to me that it'd be possible to fund ourselves through grants and whatnot, but now I'm really starting to think about it. I mean, it's great to be here working with Kiva, but it'd be a whole lot better if we could turn this into a sustainable lifestyle. I've got so many ideas for where we could take Kiva that it'd be a shame to walk away from it in a few months without having explored all the options.
The last thing I'm going to mention (and trust me when I say I'm forgetting tons of stuff), is that a few days ago Fiona called the UN Microfinance Summit Campaign to ask them if they could send us their list of Microfinancing organizations and they were like "Oh, Kiva? Yeah, we think you guys are great. We've been sending everybody to your site."
The United Nations. I mean, holy shit.
Posted by flow Frazao on February 16, 2006 at 02:08 PM in Kiva/VEF, Microfinancing | Permalink | Comments (0) | TrackBack
Sunday, 29 January 2006
Key Principles of Microfinance
The Consultative Group to Assist the Poor (CGAP) is a consortium of 31 public and private development agencies working together to expand access to financial services for the poor, referred to as microfinance. These principles were developed and endorsed by CGAP and its 31 member donors, and further endorsed by the Group of Eight leaders at the G8 Summit on 10 June 2004 (Sea Island, Georgia, USA).
- Poor people need a variety of financial services, not just loans. In addition to credit, they want savings, insurance, and money transfer services.
- Microfinance is a powerful tool to fight poverty. Poor households use financial services to raise income, build their assets, and cushion themselves against external shocks.
- Microfinance means building financial systems that serve the poor. Microfinance will reach its full potential only if it is integrated into a country’s mainstream financial system.
- Microfinance can pay for itself, and must do so if it is to reach very large numbers of poor people. Unless microfinance providers charge enough to cover their costs, they will always be limited by the scarce and uncertain supply of subsidies from governments and donors.
- Microfinance is about building permanent local financial institutions that can attract domestic deposits, recycle them into loans, and provide other financial services.
- Microcredit is not always the answer. Other kinds of support may work better for people who are so destitute that they are without income or means of repayment.
- Interest rate ceilings hurt poor people by making it harder for them to get credit. Making many small loans costs more than making a few large ones. Interest rate ceilings prevent microfinance institutions from covering their costs, and thereby choke off the supply of credit for poor people.
- The job of government is to enable financial services, not to provide them directly. Governments can almost never do a good job of lending, but they can set a supporting policy environment.
- Donor funds should complement private capital, not compete with it. Donor subsides should be temporary start-up support designed to get an institution to the point where it can tap private funding sources, such as deposits.
- The key bottleneck is the shortage of strong institutions and managers. Donors should focus their support on building capacity.
- Microfinance works best when it measures—and discloses—its performance. Reporting not only helps stakeholders judge costs and benefits, but it also improves performance. MFIs need to produce accurate and comparable reporting on financial perfomance (e.g., loan repayment and cost recovery) as well as social performance (e.g., number and poverty level of clients being served).
Posted by flow Frazao on January 29, 2006 at 12:34 PM in Microfinancing | Permalink | Comments (0) | TrackBack
Thursday, 26 January 2006
U.N. Lends Backing to the $100 Laptop
The sub-$100 laptop - yet another great invention from the nerds at MIT. Of course, my own personal opinion is that before we get started on the One Laptop Per Child program we might want to finish up the whole One Meal Per Child Per Day initiative, but what do I know:
The United Nations on Thursday lent its support to a project which aims to ship inexpensive, hand-cranked laptops to school-aged children worldwide.
Kemal Dervis, head of the U.N. Development Program, will sign a memorandum of understanding Saturday with Nicholas Negroponte, chairman of One Laptop per Child, on the $100 laptop project, at the World Economic Forum's annual meeting.
The program aims to ship 1 million units by the end of next year to sell to governments at cost for distribution to school children and teachers.
UNDP will work with Negroponte's organization to deliver "technology and resources to targeted schools in the least developed countries," the U.N. agency said in a statement.
Negroponte wants to start shipping the cheap laptop, which is to have wireless network access and a hand-crank to provide electricity, later this year. The aim is to have governments or donors buy them and give full ownership to the children.
Negroponte, who is also chairman of the MIT Media Lab, has said he expects to sell 1 million of them to Brazil, Thailand, Egypt and Nigeria.
The laptop is expected to run on an open-source operating system, such as Linux.
The devices will be lime green in color, with a yellow hand crank, to make them appealing to children and, so the thinking goes, to fend off potential thieves.
Posted by flow Frazao on January 26, 2006 at 11:10 AM in Cool Stuff, Microfinancing, Web/Tech, World News | Permalink | Comments (0) | TrackBack
Thursday, 12 January 2006
Problems vs. Solutions
"The heart of the matter, as I see it, is the stark fact that world poverty is primarily a problem of two million villages, and thus a problem of two thousand million villagers. The solution cannot be found in the cities of the poor countries. Unless the hinterland can be made tolerable, the problem of world poverty is intolerable, and inevitably will get worse."-- E.F. Schumacher, Small Is Beautiful
If there's one thing I learned during my years of consulting, it's that too much knowledge is a terrible thing. I couldn't possibly begin to count the number of projects I was on that had worked themselves into a state of "analysis paralysis". That is, they'd spent so much time thinking about the question that their brains froze up whenever they tried to think of an answer.
Sometimes you have to jump in with both feet and just start slogging away. Granted, you fuck up left and right, but as long as you don't keep screwing up the same thing in the same way you inevitably work your way towards a solution. It's not always the most elegant one, and it's usually not the one that will win you any industry awards, but it gets the job done. In my experience, I've generally found that the best time to solve these problems is while the talkers are talking.
Of course, as I soon as I solved a problem for a client they would immediately switch from talking about how complicated the issue was to talking about how smart they were for having fixed it. Not that it made any difference to me - as a consultant I was already out the door. But it just goes to show that you don't need to know much about a problem to solve it. You just have to be willing to bang your head against a wall for a while and hope your brain is big enough to knock it down.
"There are two kinds of people, those who do the work and those who take the credit. Try to be in the first group; there is less competition there."-- Indira Gandhi
Posted by flow Frazao on January 12, 2006 at 11:39 PM in Little Stories, Me, Microfinancing | Permalink | Comments (0) | TrackBack
Wednesday, 04 January 2006
Thoughts on What the Future Holds for the Non-Profit World
As most of you know, I've been doing a lot of reading over the past few months about microfinancing and the world of non-profits in general. I've learned quite a lot, and it's been a humbling experience to jump into a universe about which I know so little.
One of the themes I've come across repeatedly in my readings is what seems to be a relatively high level of mistrust regarding charitable donations. A week ago I read an article on the anniversary of the tsunami that said over a third of the donations had gone to operating costs for the various organizations. Similarly, I've heard about the same type of behavior (and worse) regarding money donated after 9/11. One can only imagine what we'll be hearing on the one year anniversary of Hurricane Katrina.
Of course, this type of conduct is confined to a small minority of organizations, but it happens enough that it seems to have become a considerable deterrent to people donating money. How many times have you heard somebody say "Yeah, I'd like to donate some money, but who knows how much of that will actually make it to the people in need?"
One of the things I find so exciting about Kiva is the prospect of countering this type of attitude by addressing the problem directly. For the first time, a global technology exists that can reassure people that yes, all of your money is really going directly to a person who needs it. Thanks to regular photos/blogging/email updates, there will be no doubt as to the difference a Kiva donation will have made. I suspect that this will be a very effective way to show people that 30% overhead is not a byproduct of philanthropy, but merely ineffective operating on the part of an outdated model.
My vision is that in the 21st century the days of handing money to a monolithic organization only to watch it disappear behind a curtain will be over. Why shouldn't people keep tabs on their social investments as well as their stocks, bonds, and other assets? There's no reason that people shouldn't expect a return on any investment - be it a financially beneficial or social one. The return might not take on a monetary form, but it is still a return just the same.
In addition to making profit-maximizing investments in companies based on potential financial gain, the 21st century "social capitalist" will also choose to make social-objective driven investments (aka donations) based on potential social gain. For example, while a traditional investment takes into account things like P/E ratios and Morningstar ratings, a socially motivated investment will consider factors such as administrative costs vs. actual services delivered and ratings by independent non-profit evaluators such as Charity Navigator.
Fifteen years ago it would have been impossible to imagine the amount of control individuals now wield over their portfolios. In 1990 who would have thought that Grandmas would be daytrading in their muumuus over a computer without ever having to call a stockbroker or sign a pile of forms?
The same level of control is coming to the non-profit world. People will soon be able to monitor their social investments with as little effort as they now monitor their other assets. The days of enormous organizations siphoning money off the goodwill of regular people are numbered, and I certainly won't miss them when they're gone.
For a more in-depth look at the future of the non-profit world by one of the industry leaders, take a look at this paper by Muhammad Yunus.
Posted by flow Frazao on January 4, 2006 at 01:18 AM in Kiva/VEF, Microfinancing, Web/Tech | Permalink | Comments (0) | TrackBack
Tuesday, 03 January 2006
Low-cost Lamps Brighten the Future of Rural India
Until just three months ago, life in this humble village without electricity would come to a grinding halt after sunset. Inside his mud-and-clay home, Ganpat Jadhav's three children used to study in the dim, smoky glow of a kerosene lamp. And when their monthly fuel quota of four liters dried up in just a fortnight, they had to strain their eyes using the light from a cooking fire.That all changed with the installation of low-cost, energy-efficient lamps that are powered entirely by the sun. The GSBF lamps use LEDs - light emitting diodes - that are four times more efficient than an incandescent bulb. After a $55 installation cost, solar energy lights the lamp free of charge.
I read the first few paragraphs of this article and thought to myself, "Now there's an organization that knows how to apply technology and actually solve problems." Wouldn't you know it - they're a branch of the Grameen Bank:
"Children can now study at night, elders can manage their chores better," says Mr. Jadhav. "Life doesn't halt anymore when darkness falls."
The innovative lights were installed by the Grameen Surya Bijli Foundation (GSBF), a Bombay-based nongovernmental organization focused on bringing light to rural India. Some 100,000 Indian villages do not yet have electricity. LED lighting, like cellphones, is another example of a technology whose low cost could allow the rural poor to leapfrog into the 21st century.
Posted by flow Frazao on January 3, 2006 at 11:34 AM in Cool Stuff, Microfinancing, Web/Tech | Permalink | Comments (0) | TrackBack
Tanzania hits 30 percent target of women representation in parliament
Here's a bit of good news about one of the countries Fiona and I will be working in:
Tanzania has become the third country within the South African Development Community (SADC) to have attained the target of having women taking up at least 30 percent of the country's parliamentary seats.The registration of parliamentary swear-in's showed that 97 women had been sworn in by the parliament which met on December 30 in Dodoma in central Tanzania.
The number of women as against the total of 319 members of parliament stands a 30.4 percent of women representation in the parliament, just in accordance with the 1997 SADC declaration that required signatory countries to attain 30 percent of women representation in decision-making posts by the end of 2005.
Posted by flow Frazao on January 3, 2006 at 11:04 AM in Africa, Microfinancing | Permalink | Comments (0) | TrackBack
Monday, 02 January 2006
Muhammad Yunus Article In Business Week
For those who haven't been reading my posts recently about the Microcredit adventure Fiona and I are about to embark upon, here's a bit of background on my current hero, Muhammad Yunus:
Today, Yunus runs Bangladesh's Grameen Bank, a leading advocate for the world's poor that has lent more than $5.1 billion to 5.3 million people. The bank is built on Yunus' conviction that poor people can be both reliable borrowers and avid entrepreneurs. It even includes a project called Struggling Members Program that serves 55,000 beggars. Under Yunus, Grameen has spread the idea of microcredit throughout Bangladesh, Southern Asia, and the rest of the developing world."
That said, it's amazing to see how Yunus' idea has taken off. It boggles my mind to think that thirty years ago he loaned out what basically amounts to a pocketful of spare change, and from that so much has spawned. This article puts forth that almost 100 million people have been affected by the Microfinancing movement:
When Yunus started Grameen, he wanted to turn traditional banking on its head. One of his first moves was to focus on women because they are most likely to think of the family's needs. This was a radical step in a traditional Muslim society, and it took Yunus six years to reach his initial goal of a 50-50 gender distribution among borrowers. Today, 96% of Grameen's borrowers are women. "If banks made large loans, he made small loans. If banks required paperwork, his loans were for the illiterate. Whatever banks did, he did the opposite," marvels Sam Daley-Harris, director of the Microcredit Summit Campaign. "He's a genius."
I would tend to agree with Sam's statement. Even if someone were to disagree, I don't think anyone could argue that Yunus is at the very least a visionary in his field. Here's a guy who has turned banking on it's head in Bangladesh, and there are now offshoot programs providing funding, training, technical assistance and other support services to 86 Grameen type credit and savings programs in 28 countries. Talk about repeatable results - if the Grameen Bank were a physics experiment Yunus would have won a Nobel Prize by now.
Posted by flow Frazao on January 2, 2006 at 09:27 PM in Microfinancing | Permalink | Comments (0) | TrackBack
Sunday, 18 December 2005
Banker to the Poor
As you may or may not know, Fiona and I are planning on going to Africa in mid-February. I wrote a long post about it here, in case you want to play catch-up.
We'll be working on a microcredit project in conjunction with the Village Enterprise Fund, and in preparation I've been doing a fair amount of research into the field of microfinancing.
Right now, I'm reading a book called Banker to the Poor by Muhammad Yunus. The author is the founder of one of the first microlending projects, and the book is a chronicle of his experiences along the way.
Since it is so difficult (for me, at least) to explain the concept of microcredit, I'll let Mr. Yunus do the talking for me:
Profit is unashamedly biased toward capital. In their powerless state, the poor work for the benefit of someone who controls the productive assets. Why can they not control any capital? Because they do not inherit any capital or credit and nobody gives them access to it because they are not considered credit-worthy.
giving the poor access to credit allows them to immediately put into practice the skills they already know - to weave, husk rice paddy, raise cows, peddle a rickshaw. And the cash they earn is then a tool, a key that unlocks a host of other abilities and allows them to explore their own potential."
In the mid-1970s Mr. Yunus extended a $27 loan to a group of 40 people. From that one act, a series of events transpired which lead to his founding the Grameen Bank, and today Mr. Yunus' little project has become the largest bank in Bangladesh and has provided over 3.8 billion dollars to 2.4 million families. The loan repayment rate hovers at around 98% (American small business loans default somewhere around 30% of the time). It also bears mentioning that the 98% figure includes the effects of the devastating Bangladeshi floods of 1981, 1985, 1987, and 1988. In short, to say the Grameen experiment has been a success would be a rather absurd understatement.
It's fascinating to read about the obstacles that Grameen has overcome during the course of its evolution. Time and time again, Mr. Yunus has found himself up against seemingly immovable barriers, and he's managed to resolve the problems every time with logic, compassion, and a laser-focused vision that he refuses to compromise.
To read more about Muhammad Yunus and the Grameen Bank, click here.
Posted by flow Frazao on December 18, 2005 at 02:05 AM in Kiva/VEF, Microfinancing | Permalink | Comments (0) | TrackBack
Friday, 11 November 2005
Microfinancing From The Entrepreneur's Perspective
As a follow-up to yesterday's post, here's a letter by a business owner who was the recipient of a $300 loan from Kiva (which has been repaid in full):
Greetings from Tororo Uganda in the name of our lord Jesus Christ. I want to thank all of you for the loan money that you gave to me . Your money changed the life of my family together with the community from the area we operate in. My business has gone so high in stock and profit. This is the reason why I have been able to pay back all the loan money that I got from you.
I have been able to do the following with the help of the money that I get as profit our of my business:
1. Pay the school fees for all my children.
2. Im able to buy balance diet food for the family.
3. Im able to buy cloths for my children.
4. We have been able to buy Mattress and blackett to sleep on for the first time ever since we got married . We have been married for the last 12 years.
5. My husband use to beat me a lot with abusive words of despise,but now we are living as king and Queen in our house.
6. We have bought clean cups, saucepans plents for the family.
7. The burden of my husband has been rolled away. The percentage of the growth of our family has gone from 15% to 80%.
8. We can now afford to take our family members for good treatment.
9.I can buy basic family requirements without any problem.
The entire community has benefited from the loan money that you gave to me by eating the very best nutritious and good food that he serve in our hotel. When time comes for you to visit Uganda, we will be able to serve you with very delicious food like Red Lobster etc. Recently, the local government authorities gave us a lincese as one of the best hotels with good hygine and healthy food. This shows that your money has not benefited my family alone but even the community at large. The stock and the profit of our business had gone up by 85%.
I want to thank you for having helped me to come out of poverty and heal my marriage that was about to break because of poverty. You have made me to be a champion out of nobody. Im saying this when tears are rolling down my chicks. I can’t imagine were I have come from and where I have reached now. I beg you to continue supporting the Kiva program such that our poor people can benefit from your soft loan that has already seen me through. Your loan doesen’t support only one person, but the services reaches all the community at large. Such a great help had never reached our people until when Kiva came with the initiative of eradicating poverty in the lives of our people through the soft loan. I will be very grateful for your support to Kiva beneficiaries. May the heavenly god open the flood gates of heaven and bless you abundantly.
Yours In Christ Christine Awora.
It's hard to imagine that $300 dollars can make such an immeasurable difference, isn't it? And there's loads more where this letter came from.
Posted by flow Frazao on November 11, 2005 at 07:12 PM in Kiva/VEF, Microfinancing | Permalink | Comments (0) | TrackBack
Thursday, 10 November 2005
The Start of Something Big
It's been a very exciting couple of days. I'm not really sure where to start, so I'll go from the beginning.
As I'm sure anyone affluent enough to be reading this blog knows, we are living in a capitalistic society. "It takes money to make money," or so goes the saying. For example, in order to open a new business in America a budding entrepreneur would need to take out a small business loan at a bank in order to get started (unless he or she is incredibly lucky). Generally, these loans are in the tens or hundreds of thousands of dollars, so banks don't hand them out to just anybody.
In order to get his loan the entrepreneur would generally show up at a bank in a suit and tie and hope that his credit and ideas are both good enough to convince the loan manager to lend him the necessary startup capital. If he has a decent credit history and a viable business plan, then odds are he'd walk away with a loan for enough money to get him on his way. Once he starts making a profit, then he can pay back his loan and begin growing his business and creating wealth.
However, if he has a bad credit history (or worse, none at all) then it's unlikely any bank would take a risk on him. And without that initial seed money, our would-be entrepreneur is out of luck. For better or worse, one of the main determiners of success in this world is one's access to capital on credit.
In the developing world, the model is exactly the same. The only difference is a matter of scale. Instead of small business loans being in the $100,000 range, they can be as low as $100. In third world economies a hundred dollars is enough to buy a few fishing nets or a sewing machine, and that is enough to start a viable business.
The problem arises when a poor entrepreneur walks into a bank. With no credit record and no collateral, banks are simply not set up to deal with issuing loans to the impoverished. Poor people can't get loans, which means they can't start businesses, which means they're stuck in an endless loop of poverty.
This is where the concept of Microfinancing comes in. Over the past 20 years, a model of international aid has arisen to plug the holes in the banks that poor people fall through:
After having been through countries like Cambodia, I've seen the damage that can be done by too much welfare. For example, the Cambodian government has jailed Cambodians for defusing landmines because the government is afraid that if all the landmines are defused then they'll stop getting foreign aid.
That said, the idea of Microfinancing is a "teach a man to fish" solution, and over the past thirty years it's proven to be very successful:
In 1976, Yunus founded the Grameen Bank to make loans to poor Bangladeshis. Since then the Grameen Bank has issued more than $5 billion in loans to some 4 million borrowers. To ensure repayment, the bank uses a system of "solidarity groups": small informal groups which apply together for loans and whose members act as co-guarantors of repayment and support one another's efforts at economic self-advancement. As it has grown, the Grameen Bank has also developed other systems of alternate credit that serve the poor. In addition to microcredit, it offers housing loans and well as financing for fisheries and irrigation projects, venture capital, textiles, and other activities, along with other banking services such as savings."
Fiona and I had heard about this notion, and we started thinking about what we could do to help implement it. We came up with an idea for a website where we could directly link donors with entrepreneurs. We figured we could post a bit about the person who needed a small start-up loan, and then people could sign up to sponsor them with loans as small as, say, $25. Then over the course of the loan, the donor would be kept updated as to how the entrepreneur was doing. There would be a real connection there and it would be plainly evident how much difference even a small amount of money could make to somebody.
We spent about three days in a frenzy of planning and creative talks. The energy between us has been so high it's staggering.
Then we found out that a couple of people had exactly the same idea as us about a year ago, and their website came out of testing in mid-October. Kiva.org is the first organization to use the internet to bring the power of Microfinancing directly to the donor. Of course, there was a part of me that was disappointed that we didn't get there first, but I suppose I can get over that.
We immediately got in touch with the founders of Kiva, and found out that they're a young married couple (like us) in San Francisco. I offered to help in any way I can (I've been known to write a line of code or two), and I'm eagerly waiting to find out what I can do to help.
After making contact with Kiva, Fiona called Kiva's partner, Village Enterprise Fund to find out more about opportunities with them. Wouldn't you know it, the founder of VEF picked up the phone.
He was on his way out the door to catch a flight to Tanzania, but he was excited to hear about us. He gave us his email address, and after sending our resumes and such, we wound up talking to him this morning over the phone (we actually used Skype, but you get my point).
We spoke to him for about twenty minutes, and came away extremely excited. He said he's already thinking about a couple of different things we could do, and we're going to get in touch again when he gets back to the US on Nov. 20. We're tentatively planning to go to San Francisco in early February to meet with him, but we'll need to find out more over the next few months.
I'm really looking forward to the prospect of being able to employ all the knowledge I've acquired travelling and working over the past 10 years. Looking back I feel like the collective bunch of all my random experiences - from writing web-based software to teaching English classes in Thailand to getting fondled by a Buddhist monk in Southeast Asia - have all led up to this. I feel, for the first time in my life, that I am in a unique position to use a skill set that I alone possess in a way that could positively affect people all over the world.
For more information check out the following links:
- United Nations - The International Year of Microcredit 2005
- Kiva
- Village Enterprise Fund
- Wikipedia page on Microcredit
Posted by flow Frazao on November 10, 2005 at 11:11 PM in Kiva/VEF, Microfinancing | Permalink | Comments (4) | TrackBack