Kiva.org - microfinancing

In his book "The road to hell: The Ravaging Effects of Foreign Aid and International Charity" Michael Maren details some of the more troubling aspects of third world charity. It's been a while since I read the book, but some of the consequences indentified by Maren include
- local governments become corrupted by the aid (and money associated with it) and become less responsible to local citizenry.
- There may even be a perverse incentive to attempt to perpetuate a problem to keep the aid money flowing. This incentive is in place for both the receiving country as well as the aid organization.
- Local economies are destroyed,(example: Local farmers can't compete with free food) and aid efforts are too rarely focused on building local economies.

That brings me to Kiva.org which I first heard about a couple days ago in this related New York Times article by Nicholas Kristof. (You might have noticed the Kiva link I recently placed in the left margin also.) I find this is a very interesting approach that seems to do a good job alieviating concerns about creating dependency while at the same time helping build local economies. This improves standards of living by enabling those in local economies who are able to put resources to good use. This type of program has a feel of sustainability about it.

From the Kiva.org website: Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can "sponsor a business" and help the world's working poor make great strides towards economic independence.

The site allows you to select businesses to support and loan increments as low as $25 with a paypal account. Go to Kiva.org for more information on how it works.

My wife and I signed up, and our first micro-loan is going to this fellow in Azerbaijan who has previously secured and paid loans for livestock and a stable. Other loans are also going to:
- a seamstress in Ghana to expand by purchasing more sewing machines,
- a landscaper in Mexico to upgrade equipment,
- a retailer in Ecuador to expand inventory,
- and a bakery in Ukraine to purchase bulk inventory.

You can click here to read their business cases and their stories. Some may still be raising money.

And as to sustainability - when the loans are (hopefully) repaid the funds can be put to work again for someone else.