Saturday, September 09, 2006

I am in full 'Kiva'

This post started out in the comments section in response to Kuriakose's comment. But then it got too big :)

Jokes aside, the concept behind Kiva which Kuriakose correctly refers to as the '...attempts to opensource the supply side (where the cash comes from) of microfinance...' is so amazing that I felt it deserved its own post. They partner with microcredit institutions in developing countries, get profiles of credit vetted entrepreneurs from them and then enable the general public to give micro loans to them. Yes, loans not donations. By taking out commercial banks from the money raising part of the microfinance chain, (I hope) their partners can offer better interest rates to the end users. From a donor perspective, this enables people to actually see their money in action and a high probability that they will get their money back (and just lose out on the interest). I know from personal experience with Asha for Education that it's always easy to raise money through Support a Child programs as donors prefer to donate to a real person instead of to anonymous recipients. So I can imagine this program (if it can build trust) having the potential to raise lots of money. But how well it can scale will depend almost entirely on how many honest and able microcredit partners they can tie up with. Even though they are just 2 years old , they already have tie ups in about 12 countries. So that's a pretty impressive start.

The reason I am so excited about Kiva is that it's an example of how technology (in this case internet) can be used to have an real impact (making capital available) on people in the developing world. I plan to sign up as a small donor (or capital provider) just to see how it works. I will report back with details about my experience later.

PS: If you think the subject is cryptic, look up the meaning of Kiva

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