Kiva and mf 20100405
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Transcript of Kiva and mf 20100405
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Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime
What if he knows how to fish but can’tafford a fishing net?
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Problem Statement & Solution: Hand up, not a hand out
Supplies for a store
Seed for crops
Tools for carpentry
Cloth for weaving
Materials for making products
Millions of people around the world could help themselves if they just had access to money for starting or expanding their small business
Whether they need tools, seed, fertilizer, cloth, store supplies, it just takes that first step, that start-up capital, to give them a chance to be truly self-sufficient
However they cannot apply for a loan from a bank, credit company or credit co-operative because banks typically do not serve the poor
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Introduction to Microfinance
The poor are typically excluded by financial service providers:
•No collateral•No credit history •Illiteracy•Transaction costs
The poor need financial services, and already use them informally:
• Borrowing money from loan sharks with interest rates so high that it may be impossible to ever pay back• Savings accounts kept in the home, vulnerable to theft• Investing in livestock which is vulnerable to disease• Other communal methods (ASCAs, ROSCAs)
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JanuaryAugustJanuary
Illness
Reaping investments
Smoothing Income
Saying that someone lives on $2 a day is missing half of it
Sometimes they live on more and Some days on less
Microfinance is providing financial services to copeThrough a microfinance institution: MFI
$3
$2
$1
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Microfinance Institutions
• Some focus on women in places where women don’t have the same rights as men and so have no economic empowerment
• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access services
• Some focus on a comprehensive program which includes business training with financial products
• Some focus on women in places where women don’t have the same rights as men and so have no economic empowerment
• Some focus on the rural population in areas where people are isolated and cannot travel to cities to access services
• Some focus on a comprehensive program which includes business training with financial products
There are thousands of microfinance institutions around the world, and they all vary a little depending on the
region they are in and people they are targeting to help
What ties them all together, however, is a desire to help the poor by providing them with financial services
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Sierra’s MFIs: PRISMA
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Sierra’s MFIs: EMPRENDER
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The Traditional Microfinance Lending Process
Microfinance Institutions
Microfinance Institutions
EntrepreneursEntrepreneurs
Banks and NGOs
Banks and NGOs
• Microfinance institutions typically get the money that they lend, from banks or non-governmental organizations, or both
• This can be expensive, as it is often borrowed with interest
• There may also be difficult application procedures to access debt capital from non-governmental organizations
• Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions
• Restrictions that microfinance institutions face ultimately affect the entrepreneurs, who rely on microfinance institutions to serve them
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The Kiva Microfinance Lending Process
Microfinance Institutions
Microfinance Institutions
EntrepreneursEntrepreneurs
You!You!
With Kiva, you can be micro-lender
You can act as a banker and provide the funds to microfinance institutions that they then lend to entrepreneurs
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www.kiva.org
• Kiva.org is a website which allows you to lend to an entrepreneur who needs a loan
• Through Kiva, you loan as little as $25 to an entrepreneur at 0% interest
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www.kiva.org
• The Kiva website lists loan requests which you can browse, just like browsing items on eBay or another website
• Loan requests are often funded within minutes by Kiva’s active lender base, and new loans are always coming on the site
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www.kiva.org
Each loan request has a business page which gives you more information about the loan…
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www.kiva.org
Size of the loan and status
Size of the loan and status
Summary of the business and loan, including
when it is expected to be
paid back
Summary of the business and loan, including
when it is expected to be
paid back
Information on the microfinance institution which is managing the
loan on the ground
Information on the microfinance institution which is managing the
loan on the ground
Picture of the entrepreneurPicture of the entrepreneur
Description of the business and
what the loan will be used for
Description of the business and
what the loan will be used for
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Translation Volunteers
Over 400 Volunteers
Handle around 8,000 loansa month
Kiva has French, SpanishRussian, Portuguese, Indonesian, Mongolian and Vietnamese translators!
Volunteers working together at a December 2009 marathon to prepare for holiday traffic to Kiva.org
To get all these loans online, Kiva has:
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www.kiva.org
The business page also shows you all of the
other people around the world who are
contributing to this loan
The business page also shows you all of the
other people around the world who are
contributing to this loan
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Kiva’s Microfinance Partners
NicaraguaHonduras
Togo
Senegal
Bulgaria
Gaza
Uganda
Kenya
Tanzania
Cambodia
Samoa
Mexico
Ecuador Nigeria
Ghana
Moldova
Mozambique
Ukraine
Afghanistan
Congo
Indonesia
Azerbaijan
Cameroon
Tajikistan
Bolivia
Haiti
Dominican Republic
Vietnam
Iraq
Kiva has lent over 129 million dollars in loans through 111 Microfinance Partners in 52 countries and is still growing
Paraguay
Pakistan
Peru
Mali
New YorkSan Francisco
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What Kinds of Businesses: Food
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Food Cont…
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Repair Shops
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General Stores
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EVERY BUSINESS !!
Taxi
Jewelry
Butcher
ChildcareGym
Furniture
SeamstressClothing
Restaurant
Farmer
Flowers
Cobler
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And Non Businesses…
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Does it help?
Theory behind investment What we actually see
Yes, it helps, but its not a silver bullet.
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Doesn’t always help: Doña Carmen
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But most of the time, it does help: Doña Justina
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Doña Alba
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Don Lorenzo
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Doña Bertha
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•Savings•Insurance
•Health•Life•Property•Disaster
•Financing Products•Technology
Future of Microfinance
