Monday, September 1, 2008

Krazy for Kiva Kredits

A few days ago, my favorite microfinance charity, Kiva, rolled out a new procedure: instead of giving you back your $25 when the loan is fully repaid, you get your little piece of the repaid installment as soon as they do. They used to hold onto it until the very end, using the interest to fund their expenses. I thought this was a terrific plan.

I'm not sure what they're doing to meet those expenses now, but I can see what inspired this change. The past few months has seen an explosion of loan requests - from a daily average of 60 to an average of 600 - and there were frequent issues with time running out before a loan got fully funded. This new system will alleviate that, at least initially, and it doesn't just benefit the borrowers. As a lender with 10 x $25 increments in the microfinance pipeline, this means I can make a new loan more frequently and regularly. Now that may not sound exciting to a lot of folks, but most of us find it "fun" to sift through borrowers for someone whose story or business strikes a chord. It also benefits Kiva - existing lenders will be visiting the site more often, giving more thought to microlending, and very likely talking about it more with the people in their lives.

E.g. this morning I got in on a loan to a 63-year-old coffee grower in Peru who wants to expand the size of her orchard (I guess that's what you call it when it's too small to be classified as a plantation). Why did I pick that loan? For odd reasons, that make total sense when I describe them to the people who know me...

- I've been to Peru and have seen first-hand how prevalent the poverty is amongst the descendants of the Incas.
- I'm writing this from a B&B in Argentina, so there's this feeling of being "in the neighborhood"
- I discovered that I like coffee just 20 months ago - after 25 years of being a committed tea-only drinker
- 14 years ago, I worked for a fair trade coffee co-op (CafeDirect) in the UK, and know how tempting it is for people this poor to grow coca for the drug cartels
- She's 63. Instead of retiring, she's expanding. I want that motivation when I'm her age!

The point of mentioning all this is that I'll probably mention it to my mother or sister or a client purely for its conversational value. However, you never know when an amusing story will be filed in the back of someone's mind and retrieved later.

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