Microcredits

The concept of giving microcredits to entrepreneurs in developing countries has been developed by Muhammad Yunus: He’s been awarded with the Nobel Prize for Peace alongside his bank for his idea and work. In this system – that is supported by Kiva – small credits from US$ 100 upwards are given to entrepreneurs in developing countries mainly. The money is used for very concrete projects like buying a new cow or tools to repair bicycles. Thus, the money is invested in new or existing businesses that are effective and enduring.

The Kiva Marketplace

Today many organisations offer microcredits to entrepreneurs, but they often do not have enough capital to match the existing demand: In cooperation with these local organisations Kiva solves the problem by enabling internet users to lend money directly to entrepreneurs in need.

Kiva is a non-profit organisation (NPO) located in San Francisco, financed by donations: Kiva does not focus on making profits, it has charitable aims only: The operation of the internet portal Kiva.org, where people can lend money to entrepreneurs, and the cooperation with local microcredit institutes in developing countries are the main tasks of Kiva.

At Kiva.org people who want to lend money are brought together with people in need of a credit in order to fight global poverty: Everybody can lend money to entrepreneurs looking for a microcredit via Kiva’s portal – with a minimum investment of US$ 25 only!

The big difference to donations is that the money is only lent and will usually be returned: According to Kiva about 98% of the credits are paid back to the donor. Thus the money can be lent again or withdrawn from Kiva.

Criticism and Risks

By lending interest free credits Kiva directly competes with established microcredit businesses: Critics assume a market deformation and the risk of dependency on interest free credits. But in fact this is often the only way to gather the money for the microcredits. Furthermore with the help of microcredits via Kiva, the entrepreneurs are less dependent on the international financial market, and this advantage is obviously very important in times of a global financial crisis.

Moreover nobody should forget that although it is a loan, the money may get lost. Or to say it with the words of Kiva: “Lending to the working poor through Kiva involves risk of principal loss. Kiva does not guarantee repayment nor do we offer a financial return on your loan.”

Kiva Team G

We – members of the Kiva Team G – are a group of gardeners mainly originating from Germany and very convinced by the concept of Kiva: In our eyes the sustainability, the possibility to lend the money several times, and the ability to see where our money goes are the main arguments in favour of the project. In contrast to donations that may be perceived as mere pittance, Kiva offers people support, enabling them to help themselves.

Until now the Team G co-financed hundreds microcredits with a grand total of thousands of US$ trough Kiva: We like to convince you of the concept of Kiva and would be very happy to welcome you in our Gardeners’ Team G.