October 7, 2007

I’d like to promote something I rather believe in – the kiva.org website, which is all about microfinance, more specifically microloans. I won’t try to sound as if I know the first thing about economics, but this is how it works: Person A lives in a developing country, and needs a largish sum of money to start or expand a business. “Largish sum” in this case means from the equivalent of US$ 200 up to US$ 1200 or so – let’s say 300 dollars. Too little for a bank to be interested in lending it, and anyway with banks there’s security, and possibly an exorbitant interest rate, and so on. Instead, Person A contacts a local microfinancing institution, where he is investigated to see that he actually seems to be able to repay a loan, and that the money would be used to good purpose. When the local microfinanciers are satisfied, A’s details are relayed to Kiva.org. They publish the information about A on their site. Persons B, C, D, E, F and G visit the site and decide to lend $25 each to A. A takes the money, builds an extension to his shop or some extra stock or whateveer it was he needed the money for, and proceeds to pay back the loan over 10 or 12 months. B, C, D, E, F and G are not rich people and none of them would have been able to lend $300 very easily, but $25 each is no great sacrifice. I know it sounds like something out of Bamse but lending money through Kiva is quite satisfying. Because it isn’t charity, nobody needs to be beholden to us for anything, there is no non-rectifiable debt of gratitude (which I have come to realise is a very fundamental concept for Swedes – but I won’t sidetrack into discussing that here.)

For a lot more detail, see the Kiva website. I’ll just mention, too, that when somebody lends money they must use Paypal – and Kiva is the only organization that Paypal doesn’t charge a fee from for using their service.

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