Jane B (knally) wrote,
Jane B

Little Loans

I've been interested in the idea of microcredit for several years, since reading the book The Price of a Dream The story of the Grameen Bank by David Bornstein. You may recognise the name of the bank, since it was in the news recently as a joint Nobel peace prize winner. The idea of microcredit is that small loans are made to people who have no collateral to be able to get a loan from an ordinary bank. A common practice is for a group of people to get together in a loan club, and for one person to ask for a loan while the others support them. This brings peer pressure into the equation which can raise concerns of harassment within small communities. Also the amount of administration that is required to administer a small loan means the interest rates can be quite high, although not as exorbitant as those of local moneylenders. My personal opinion is that it is a worthwhile way of helping to relieve poverty.

For some time I've been saving a monthly amount with the Shared Interest Society which lends to fair trade organisations, and every couple of years issues a micro-credit bond to which current savers can subscribe. I'm still saving regularly with them (if nothing else, it provides a useful rainy day fund for myself!), but last year I started participating in a more direct method of loans which is by using the Kiva website.

Kiva is an online organisation which connects lenders to those who want to borrow money, through microfinance organisations in several countries. Each loan is divided into multiples of 25 dollars, so it's possible to lend quite a small amount, and to split any money you want to loan amongst several borrowers. You don't get any interest on your money, but you do have a very good chance of getting it back since microcredit borrowers have a good repayment history.

The main attraction of the Kiva concept is that you see where the money goes and choose who to lend to. Just reading about the kind of jobs and trades that exist in other countries is fascinating and educational. I use all kinds of criteria for making a loan: is the borrower supporting other people (either family or employees); do they have a good credit history; do they work in an area I'm interested in (carpenters and needleworkers for example); is it a job I've never heard of before; something indefinable that just appeals me in the description.

My first loan was to Angel's Bike Repair in Bulgaria. The original plan was straightforward and obviously useful to his community, but he keeps coming up with new ways to advertise his business and earn money. My latest loan is to Madam Dédé AMENYINOU because who could not fail to be impressed by a lady who carries her shop on her head!

In my own life, I'm not a risk-taker at all, and would never consider taking out a loan except for a mortgage. Consequently I find all the people on Kiva very brave :-) If I'm feeling a little defeated by life, then I go and look at some of the amazing people on my lending list and I feel if they can do it, so can I!

Tags: kiva, microfinance

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