We are now faced with the challenge of meeting the huge outpouring of support that has resulted from the publicity and subsequent interest. Kiva will only scale as fast as is healthy for us and the for villages in which our partners work. Our first partner, Village Enterprise Fund, is an incredible organization that is capable of meeting the demand -- but this will not happen instantly. VEF staff in East Africa will be using their expertise to list new businesses on our site by December 1st. We appreciate your patience as we work to make this happen as quickly as possible.
You have changed my life as well. Thank you.
Matt Flannery
Co-founder, Kiva.org
This letter refers to those of you who responded to a diary last week about microcredit and Kiva. The dKOS community's incredible outpouring of donations funded every single Kiva business. We really should be proud.
Matt Flannery has a new blog, The Kiva Chronicles at Social Edge.
The comments to that diary also contained a wealth of information about organizations engaged in microcredit lending and invaluable information about microcredit in general.
The purpose of this follow-up diary is to re-cap why microcredit is one of the most effective tools ever conceived for fighting poverty. This may be of particular interest to those who didn't read the earlier post. But more importantly, I wanted to offer a rundown on those agencies engaged in microcredit that KOS readers mentioned in the comments, as well as a couple of others.
Microcredit is the practice of loaning very small amounts, as small as $25 to the poverty stricken to help them start small family or individual businesses. The repayment and success rate is higher than with mainstream banks lending to established businesses. Perhaps the best example of the results of microcredit came from FINCA International and was posted by Nonie3234
From Begging for Bubbles to Running Her Own Business
When she was 13 years old, Nayima Umaru was married and two years later gave birth to her first child. She had seven more children with her first husband before he became ill and died, leaving her pregnant with twins and no way to make a living. Her neighbors shunned her because she was an unmarried woman with many children, and had no one to provide for her.
Mrs. Umaru moved to a single room with her children. They had nothing to eat; Mrs. Umaru couldn't even afford a piece of soap. She would sweet-talk whomever was doing laundry, asking them to give her their used bubbles so she could wash her childrens clothes. Because they were so poor, all the children were forced to drop out of school. Mrs. Umaru's family members only called on her when their maids were away and they had chores to be done. She obliged them willingly, however, because she knew her children would have a full meal from the leftovers.
Mrs. Umaru began selling bananas and fried cassava by the roadsides, but still her life didn't change much. Then her friend introduced her to her village banking group so she could expand her banana business. At first, the group members shunned her because she was considered half-caste - her father was not Ugandan. They believed she would run away with the money, and they would be responsible for paying her loan. But her friend pleaded with them to accept Mrs. Umaru; they consented on condition that the friend would repay Mrs. Umaru's loan if she defaulted.
Mrs. Umaru's first loan was 100,000 Uganda shillings (US$50). Her dream was to operate her own small business and improve the lives of her children, so she saved a portion of each loan and, today, after eight years as a village bank member, she runs a small restaurant and a catering business. Two of her daughters are now married and work at the restaurant; four of her children are still in school; and one son works at a petrol station. She has remarried for companionship, and plans to complete her four-bedroom house this year.
Mrs. Umaru is grateful that her friend sponsored her in their village bank group, and thankful that FINCA Uganda has been there for her as she has fulfilled her dream.
THE LIST
Here is a list of some of the organizations that Kossacks mentioned, a link, and a brief description. It's important to note that none of these groups has a peer-to-peer structure. In other words, you can't lend directly to an individual as you can through Kiva
Village Enterprise Fund
This is Kiva's partner organization. From their excellent web site:
Village Enterprise Fund helps the world's indigent launch microenterprises. The main ingredient we provide is $100 of permanent seed capital to start peer-owned businesses. We provide the capital, training and mentoring among the most poor, qualified entrepreneurs in Kenya, Uganda and Tanzania. Our main program is, of course, launching $100 businesses. In 2001, we broadened our view. We started two bigger projects, both trucking businesses for Uganda and Tanzania. These trucks, which are loans to groups of about 25 people, help our microbusinesses access more profitable markets. The Uganda truck doubled the profits of the rice cooperative group in its first 6 months!
Grameen Bank
This is the organization that started it all.
Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the over all development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable.
Grameen Foundation USA
We use microfinance and innovative technology to fight global poverty and bring opportunities to the world's poorest people. With tiny loans and financial services, we help the poor, mostly women, start businesses and escape poverty. Our global network of microfinance partners has already reached nearly 1.1 million families in 22 countries.
Grameen Foundation USA is a 501(c)3 non-profit.
Women for Women International
We begin by working with women who may have lost everything in conflict and often have nowhere else to turn. Participation in our one-year program launches women on a journey from victim to survivor to active citizen. We identify services to support graduates of the program as they continue to strive for greater social, economic and political participation in their communities.
As each woman engages in a multi-phase process of recovery and rehabilitation, she opens a window of opportunity presented by the end of conflict to help improve the rights, freedoms and status of women in her country. As women who go through our program assume leadership positions in their villages, actively participate in the reconstruction of their communities, build civil society, start businesses, train other women and serve as role models, they become active citizens who can help to establish lasting peace and stability.
Unitus
Unitus has a very good explanation of microfinance on their site; it's worth a look. From the Unitus site:
A $100 loan from a microfinance institution can be all it takes for a hard-working self-employed woman to lift her family out of poverty. Our innovative approach as a microfinance accelerator can bring this economic miracle to millions of the world's poor.
At Unitus, we bridge the gap between making a donation and making a difference. Please unite with us to create a permanent solution to global poverty.
Opportunity International
Opportunity International's approach provides emerging entrepreneurs with access to small loans and training that will enable them to start or expand their own businesses.
Microenterprise development started as microcredit - the provision of small, collateral-free loans to the poor in developing nations. Over time, this term has expanded to include a broader range of services such as savings and insurance, all encompassed by the term microfinance.
But poverty is multidimensional. Therefore, microenterprise development builds on the foundation of microfinance and adds business training, mentoring, financial planning and leadership development.
FINCA provides financial services to the world's poorest families so they can create their own jobs, raise household incomes, and improve their standard of living. We deliver these services through a global network of locally managed, self-supporting institutions.
Heifer International
Several comments mentioned Heifer. Heifer has a very informative web site. Their initiatives include:
Agroecology -- Helping communities preserve their ability to support themselves by protecting their land, water and other natural resources as well as livestock.
Animal Management -- Animal Welfare Guidelines are strictly enforced in every Heifer project.
Disaster Rehabilitation -- Providing long-term solutions that help families rebuild after a natural or man-made disaster.
Gender Equity -- Ensuring that women are equal partners in sustainable development projects and that their important role in family food security is recognized.
HIV-AIDS -- Responding aggressively to the spread of HIV/AIDS and the alarming rise in the number of the world's orphans.
Microenterprise -- Providing small loans to help people start and expand tiny businesses that yield big benefits for families.
Urban Agriculture -- Heifer is reconnecting city-dwellers with their food sources, building strong alliances and instilling an entrepreneurial spirit among adults and youth through our Urban Agriculture projects.
ACCION USA
ACCION USA lends in the US; they also have an international site, ACCION International. This is from the US site.
ACCION USA's mission is to make access to credit a permanent resource to low- and moderate-income small businesses owners in the United States. By providing small or "micro" loans to men and women who have been shut out of the traditional banking sector, ACCION helps build their businesses and increase their incomes.
ACCION sees business credit as a resource that can help narrow the income gap and provide economic opportunity, thereby stabilizing and strengthening communities and economies. At the heart of this vision is the recognition that microlending institutions must be financially sustainable, not perennially dependent on donations or government aid. For this reason, ACCION's microlending programs seek to become financially self-sufficient.
Oikocredit
Their US site is here
Started as a pioneer in the field of development financing, Oikocredit is today one of the largest financiers of the microfinance sector worldwide. Oikocredit is one of the few ethical investment funds, which finances development projects in the South benefiting disadvantaged and marginalised people.
Privately owned, Oikocredit is a unique cooperative society, which encourages investors to invest their funds in a socially responsible manner.
Southern Good Faith Fund
Good Faith Fund is to increase the incomes and assets of low-income and low-skilled residents of the Delta in Arkansas and Mississippi. Southern Good Faith Fund is a 501(c)(3) non-profit affiliate of Southern Bancorp
Fonkoze
Fonkoze - Haiti's Alternative Bank for the Organized Poor - is the largest micro-finance institution offering a full range of financial services to the rural-based poor in Haiti.
Fonkoze is a Haitian Creole acronym for Fondasyon Kole Zepòl, which means, "The Shoulder-to-Shoulder Foundation". The word itself conveys the meaning, "in the midst of sharing".
Fonkoze's mission is to build the economic foundations for democracy in Haiti.
Established in 1994, Fonkoze currently has almost 70,000 depositors, over 28,000 active borrowers (96% of whom are women), and 23 branch offices spread throughout every department of Haiti.
And finally, a few more links:
International Year of Microcredit 2005
Co-op America Foundation
Community Investing Center
Microcredit Summit Campaign
People-Centered Economic Development
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