Micro-Finance Loans: Alleviating Poverty Without Charity

Preserving the Dignity of the Recipients

A year ago I found a small ad button on a website. Which site it was I can’t even remember. It just said Kiva, a Swahili word that means ‘agreement’ or ‘unity’. Since it is not often that one falls over Swahili words on an otherwise English website, my curiosity pushed the button and opened a whole new world.

For years I was irked by the immense overheads of big charity organizations. Of course I understand that big institutions have big overheads, but somehow it just did not seem right to me that according to Forbes on average in 2014 only 84% of monies donated actually reached a needy and deserving individual.

From pressing the ad button to learning more was only a small step. Kiva (http://www.kiva.org ) is a forerunner and the first ever person-to-person micro-lending website. Whilst on the website you are given the opportunity to browse the entrepreneurs’ profiles, complete with a photo and a little background information. It tells the prospective lender what the loan is intended for, how long the repayment terms are and whether the borrower has had a loan before. This allows an unprecedented insight and choice in the kind of loans a lender might be willing to sponsor. Some lenders only make loans to women, other will only support environmentally friendly undertakings…there really is a loan to fit everybody’s principles.

Once a suitable entrepreneur has been chosen, all that is left is to make a decision as to how much a lender is willing to invest. Every investment will be returned after it has been repaid, without interest and can either be withdrawn or reinvested. The minimum loan amount is $25. Very achievable even for the smallest pockets.

One small downside is that of course, as with any investment there are risks involved. Sometimes, although rarely, loans are being defaulted, especially in areas with a volatile political climate. This risk can be slightly lowered by spreading the amount one is willing to lend over more than one loan. Should the worst happen at least only a fraction of the capital is lost.

Personally I’ve so far funded 3 loans. One to Kenya, one to Uganda and another one to the Dominican Republic. All of them are being repaid as we speak and I was able to re-lend today to Azerbeijan. It will help Shaiq Salimov to buy another cow to expand his business. I love the idea that I am helping whilst preserving the dignity of the recipient. These are not hand-outs, but a genuine attempt at allowing somebody around the world the chance to take care of himself and his family. Kiva also issues gift certificates and I have used them for Christmas and birthday presents. Over the past few months Kiva has also added US entrepreneurs to their portfolio, so if you’d rather reach out closer to home…you can.

Really, I see no good reason why not. I shall continue to do my little part, will you, too?