What do a 50-year-old woman who sells rice in Togo and a group of University students have in common? The relationship is familiar to members of U.Va. Kiva, a student organization that makes small loans to entrepreneurs in developing countries.
At a club meeting Thursday night, a group of 12 students logged onto its page on Kiva's international Web site and perused the profiles of individuals seeking loans to sell clothing, make food and run small convenience stores from their homes. With $250 to loan at the meeting, students debated whether to lend to Martine Allotonwanou, a cereal vendor from Benin, or one of the other thousands of optimistic borrowers featured online.
A recent global phenomenon, microfinance refers to the supply of loans and basic financial services to the poor, who often lack the credit to receive loans from banks. Kiva is a broad organization composed of smaller field partners that make these micro-loans on a regular basis. Each field partner posts a profile of its clients on Kiva's Web site, so that not only can anyone in the world read about each client's specific requests for a loan, but they can make a direct loan to that particular individual from the comfort of a personal computer.
Co-chair of U.Va. Kiva Sara Irvani, a third-year College student, said Kiva provides a platform for people around the world to help the poor help themselves. After reading an article in The Economist, Irvani became interested in microfinance and found out about U.Va. Kiva, which was founded two years ago as a part of Campus Kiva, a network of 19 universities that encourages students to practice microlending through the Kiva Web site. Since its founding, the U.Va. division has lent about $800 and currently has $2,000 to distribute, Irvani said.
What makes the Kiva model so appealing? "It's horrific to see the interest rate that borrowers would be paying if they sought funding elsewhere in their area," Irvani said. Take Stella Omoregie's case. Selling provisions and drinks from her home and supporting five children, this Nigerian woman requested a $950 loan. If she went to a local money lender, she would be charged 120 percent interest on the loan in comparison with the 24 percent that Kiva's field partner charges, according to Kiva's Web site.
The members of U.Va. Kiva usually target a particular demographic each week to determine the loan recipients. Middle-aged African women are this week's borrowers. The Web site has become so popular, Irvani said, that one might find someone's profile one morning, and an hour later he or she will have already received all requested funds. According to the Web site, one sum of money is lent every 13 seconds, an indication of how fast the world is catching on to microlending.
First-year College student Rehema Wachira originally heard about Kiva on "Oprah," while fellow first-year College student Francie Berger learned about it at a Model United Nations conference in high school. Wachira said, "We've stuck with it because we know we're actually lending to someone." Added Berger, "It's more than just making hypothetical resolutions for Model UN."
At U.Va. Kiva's meeting last week, members decided to make five $50 loans and shop around for potential recipients. The Web site allows lenders to create a profile and search for entrepreneurs in particular sectors, like agriculture, education and health, as well as see who else is lending to these individuals.
After deciding to lend to someone, investors add that client to their "basket" and can continue to look around for others. The process is comparable to shopping for a book on Amazon.com - and thus is a process both exciting and familiar. Field partners are responsible for providing the profiles of their clients, but must first undergo a detailed screening process to appear on Kiva's Web site.
"Part of the beauty of Kiva," said second-year Commerce student and Global Development Studies major Robin Kendall, "is that, because we can't be there to know that these individuals have a business plan, Kiva introduces you to a field partner that you know is legitimate."
Such field partners include the Lift Above Poverty Organization, which posted a video that women clients put together to thank lenders for helping them support their families. At U.Va. Kiva's meeting, students watching the video were touched by these borrowers' stories.
"The fact that people have the initiative to engage in these loans make the whole thing worthwhile and inspiring," Irvani said.
Also notable is the fact that hardly any borrowers default on Kiva loans. Kiva lenders typically receive the money from their loans within six to 12 months, at which point they can reinvest or withdraw their funds.
Irvani said a common assumption among University students is that they need to be pre-Commerce or Economics majors to get involved in microfinance. She said, though, that there is a very humanitarian aspect to microlending that anyone can understand.
By the end of the meeting, U.Va. Kiva members chose five loan recipients, including Monifa Moumouni, a 50-year-old from Togo who will use her loan to sell rice dishes to support her seven-person family, and Matilda Asante, who will use her loan to expand her grocery store in Ghana so that her five children can attend school. Countless other stories like these are posted on the Web site for lenders like U.Va. Kiva to find, one case at a time.
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