KIVA Microlending Update I: The Success of KIVA and the Blogs

It has been one of my little projects to develop within the blogsphere what I call an integrated approach to helping East Africa as a new vision for international development that can be applied anywhere the blogsphere wants to focus on. This approach was inspired by the wonderful efforts of KIVA, a microlending agency that connects small businesses with small investors like you and me. My intention has been to build on the idea of KIVA, creating an integrated context in which KIVA's efforts will be all the more effective. I will reiterate that contextual approach. But first, I think it is good to show just how successful our efforts can really be.

First off, KIVA has received a great deal of attention across the blogsphere. The result is that they have had the enviable problem of too much success. In the past month or so, they have three times had a batch of loans filled within 24 hours of posting them. I haven't plugged them for a while simply because they didn't seem to need my help. They have expanded the partners they work with (from one to five) and the number of countries they work in (more on that in a later diary) and yet they still cannot keep up with the willingness of people like you and me to help small businesses in developing nations.


For those who aren't familiar with how KIVA works, here's the deal:


Kiva's microlending directly connects small lenders (you and me) who can lend as little as $25, with small businesses who need small loans. Up until recently KIVA only worked in three nations in East Africa--Kenya, Uganda and Tanzania. Recently they have expanded to several other nations, but that will have to wait for a future diary. You get your money back within 6-18 months, though without interest. The business that KIVA works with have already gotten a boost from a partner agency and have shown some track record of success. For example, Kiva's first partner site, the Village Enterprise Fund, gives training and a small seed grant (usually about $100) to get a small business owner in East Africa started. Once a business that VEF has helped has shown promise, KIVA then helps that business get a loan (often around $500 worth, sometimes more, sometimes less) compiled from people like us to help that business expand. One way to help KIVA find more promising businesses to meet lender eagerness is to donate to Village Enterprise Fund so that they can help business at an earlier stage.


I have lent money to several KIVA businesses. The success of these businesses, helped by the loans I have participated in, is quite gratifying and shows how successful this approach can be. Let me give you three examples that I am proud to have been a part of.


1. Lakev Groceries is a small shop in Eregi, Kenya owned by Petronilla Shivachi, nicknamed "Betty" by her customers. She and her twin sister lost their father's land to neighbors because in Kenya girls cannot inherit land. They, due to lack of school fees, did not go to college, but rather married early. Petronilla was deserted by her husband and now is a single mother bringing up two children without any child support.


She started her business with assistance from VEF. After first establishing her small store, she received a $500 loan through KIVA. Petronilla used this loan to introduce new products to her store for which there is a demand but there had previously been little supply. Primarily she introduced new Mobile phone air cards. This new product brought in 70 new customers in 4 days! Her business has exploded thanks to the loan, bringing what appears to be a much-desired commodity to her town.


2. Fur Ber Fish is a fishmongering business in Tororo, Uganda owned by Penina Oburu. She received a grant in 2001 from VEF to start her small business and has gotten this business off the ground in a small, but successful way. She then received a $300 loan through KIVA, to hire a truck to go directly to Lake Victoria and buy fish for herself rather than having to go through a middleman.  Eliminating this middleman will allow her to sell her fish at a lower price.


With the KIVA loan Peninah Obure, has expanded her purchases of fish from 1-3 baskets to 10 - 18 baskets per day. This economy of scale allows her to sell more fish cheaper, at a profit of 45% as opposed to her previous 15%. She is also able to bring the fish closer to her customers, making their walk to get fish shorter. She uses her profits to support her family and to pay school fees (public education is NOT free in East Africa) and medical bills, and to buy clothes and bedding for her children.


3. Kuro Chiki Hotel is a restaurant (hotel means restaurant in Uganda), also in Tororo, Uganda, owned by Lovisa Asinde, a widow with five children. She started a small business baking pancakes, chapatti and mandazi with a donation of 100 dollars from Village Enterprise Fund in 2000. After receiving training in business skills from VEF, she decided to open a eating house in the local trading center. She received a $500 loan through KIVA to expand this eatery.


With that loan she bought a large amount of new kitchen equipment, hired new staff, and expanded her menu, allowing greater choice to her customers. She now serves around100 customers a day and makes about 80% profit. This allows her to buy new clothes for her children and to pay to send them to school.


You can imagine how gratifying it is to be a part of these women's successes. This is how an economy can be built in developing areas--through small businesses that slowly grow while serving their community. By loaning through KIVA or donating to KIVA or VEF, you can be a part of this process and help not only these small business owners, but their children as well.


KIVA and VEF (and KIVA's other partners) are doing wonderful work. But this cannot alone solve the problems of East Africa or any other part of the world. In my next diary on this topic I will once again discuss the education, environmental and economic context in which KIVA's efforts must exist and how we can help that context.

Tags: africa, kenya, Kiva, microlending, Tanzania, Uganda (all tags)

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