My Kiva micro-loan: A Repayment

Last month, I wrote about an idea which really excited me – called Kiva. The project brings together people in developing countries who are in need of small loans and members of the public who pool their cash to create a fund to lend to people.

Well, I have made a few small loans – typically $25 each – using spare cash lying around in my Paypal account and my cash is then combined with other people’s loans to go towards funding businesses. I have full control over my micro-loan and decide before I make the transaction who gets the funds.

My first loan was to a group of four women in Tanzania,  who jointly run a restaurant and a grocery store. They needed $1,200 to help grow their business and I joined in the pool of lenders to help raise the money. The scheme also works very fast – from the date they posted the loan request – they got their cash just three weeks later.

Today, I had an email from Kiva letting me know that the four women have just made their first repayment of the loan – $80 – which is then held in an account until the full amount is paid and then returned to us lenders based on our contribution. They have 15 months to repay the loan.

While I don’t get interest on the loan, I get what you might call a moral interest return by doing something which helps people to better themselves through their own hard work. I consider that a more rewarding benefit than mere charitable handouts.

It was really nice though to hear that the four ladies in Tanzania are making a success of their businesses and are also now making enough profits to start repaying the loan.

The default rate – that being people who do not repay their loan on time is a tiny 0.22%, so the risk to me is frankly, insignificant (probably equivalent to losing a pint of beer a month). Once I get the full amount back – I will probably just re-lend it again to someone else.

Incidentally, “Kiva” is a Swahili word which means “unity” or “agreement”.

Links:

The four ladies in Tanzania

Kiva.org (if you want to, put [email protected] in the referrer field *grin*)

 MAISHA Group

Tatu Maulid, Halima Mayinduka, Husna Omari and Noefita Banzi

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