Inflammation and stories on Microfinance

FINCA
FINCA International helps small business owners in more than 23 countries worldwide by providing the finances and resources they need to keep their businesses up and running.

The innovative nonprofit focuses on four core areas: financial assistance, social intermediation, enterprise development and social service impact.

FINCA International serves as a financial intermediary by providing developing business owners with loans, teaching them how to open savings accounts and helping them find insurance tailored to the products and services they offer. This helps new businesses blossom into full-running operations that help women and men provide for their families.

Their second facet, social intermediation, is also an important part of their business model. Because they are serving entrepreneurs in countries that may be lacking in gender equality, they have to serve as people who can help bring change to these communities. FINCA International provides this intermediation through education in financial literacy and Village Banking loan programs.

In addition to enterprise development, they also help developing communities through educational programs, nutrition services, and health training. These programs contribute to the success and growth of the villages and towns they serve.

FINCA International was launched in 1984 by former Peace Corps member Dr. John Hatch. Hatch started the organization as Village Banking, which operated in Bolivia and served as a financial intermediary for farmers struggling through tough economic times. The following year, Hatch started the organization.

In its early days, FINCA International operated primarily in Latin America, including Honduras, Mexico, and El Salvador, but by the early 1990s, its services had spread to Africa and Eurasia as well. Since its inauguration, FINCA International has lived up to its name and has provided services in countries all over the world.

Subsidiaries exist in countries in Africa, Western Europe, Latin America and Asia.

Julia Hettiger

Sources: FINCA, Give, Philanthropedia, MicroCapital
Photo: Flickr

direct_loans
Big business ideas and economic enterprises are no longer limited to the corporate boardroom. The digitally connected world has provided entrepreneurs from all corners of the globe ways in which to make their concepts known; social media and increased mobile access have given tomorrow’s innovators a voice they lacked in the past. The main issue, however, is that those in developing countries still lack access to funding and capital, no matter how strong their idea.

That’s where Zidisha comes in. Zidisha is a nonprofit micro-lending service that allows potential borrowers to receive direct loans from an online community. The organization’s main goal is to promote economic development by cutting out lending middlemen and local banks that often charge supremely high-interest rates on loans.

The process is quite simple. Potential borrowers need only reliable online access, something that is only becoming more and more available. The borrowers then submit a profile describing themselves and their intended use of the loan. A one-time processing fee of around $12 is charged.

Zidisha is a very small company and merely provides a platform for users to interact directly. “We’ve built a decentralized marketplace that has no offices, no employees or loan officers in borrower countries,” says company founder Julia Kurnia. Zidisha lets borrowers receive funds via SMS straight from lenders at a zero percent interest rate.

Loans are typically small. Zidisha states that the average loan is $200 to $300. Loans have enabled entrepreneurs to buy computers for an Internet café and sewing machines for a village shop. Both have relatively low costs, but a significant impact. According to Wired Magazine, the computers that were funded by Zidisha loans have empowered many, as they have been used to teach office programs like Microsoft Word and Excel.

Zidisha’s purpose is clear in its name. The word means “grow” in Swahili. By charging no interest and only asking for the principal returned, Zidisha enables borrowers’ ideas, which would normally be denied by the typical financial institutions, to flourish.

Joe Kitaj

Sources: Wired, Zidisha, Venture Beat
Photo: Zidisha

whole_planet_foundation
Poverty alleviation through microcredit is the Whole Planet Foundation’s mission. This foundation was created by the Whole Foods Market chain. It provides microcredit to different organizations in areas of Asia, Africa, the Americas and the Middle East. These organizations, in turn, offer loan programs, training and financial services that provide help to self-employed people living under poor conditions.

According to the Whole Planet Foundation’s website, they are currently supporting more than 1,000,000 micro-entrepreneurs in around 60 countries throughout the world.

Partnerships are an important pillar of the foundation because they help support these micro-entrepreneurs. The foundation has microfinance partners, supplier partners, collaborating partners, custom contributions and musicians for microcredit.

The foundation’s microfinance partners are the ones in the field. These foundations are located across the globe in places such as Honduras and China.

The Adelante Foundation in Honduras, Aga Khan Foundation in Ivory Coast, Association Costa Rica Grameen in Costa Rica, Banco do Povo Credito Solidario in Brazil, Banigualdad in Chile, CASHPOR in India, CAURIE in Senegal, Chamroeun Microfinance Limited in Cambodia, Entrepreneurs du Monde in Togo, INMAA in Morocco, KOMIDA in Israel, Pro Mujer in Argentina, Bolivia, Mexico, Nicaragua and Peru and the Women and Family Development Fund in Laos are some of the microfinance partners that the Whole Planet Foundation works with.

On the other side, the foundation’s supplier partners have donated millions in order to advocate for the Whole Planet Foundation’s mission. These partners support the foundation’s mission through different fund programs: the $100,000 Fund, the Supplier Alliance, the Poverty is Unnecessary Fund, the Ten Thousand Dollar Fund and the Microloan a Month Fund.

The partners supporting the $100,000 Fund are Frontier Co-op, Living On One, Papyrus-Recycled Greeting and Whole Foods Market.

The Supplier Alliance, the Poverty is Unnecessary Fund, the Ten Thousand Dollar Fund and the Microloan a Month Fund are supported by different organizations like Alaffia, Allegro Coffee, Amazing Grass, Blue Avocado, Garden of Life, Hain Celestial, Organic India, Suja Juice, Greyston Bakery, Rainbow Light, Chavez for Charity, Teatulia and Gourmet Guru, among others.

The foundation also has a scan-back program in which Whole Foods Market supplier partners can donate a part of their sales to the Whole Planet Foundation. According to the foundation’s website, they have more than 600 suppliers in this program.

The Whole Planet Foundation’s collaborating partners are organizations that help to increase the foundation’s reach, potency and success. A Glimmer of Hope, Aldea Artisans, My Social Canvas, The Rainforest Alliance and Valley Credit Union are some of the collaborating organizations of the foundation.

The custom contributors collect sources that help the Whole Planet Foundation support poverty alleviation. Some of their contributors are Aurora University, Hand in Hand Soap, Pura Vida Bracelets, Barefoot Wine, Crafted Peru and FedEx Office, among others.

Another way for the Whole Planet Foundation to support poverty alleviation is through the use of music. The foundation partners with musicians that are advocating for poverty alleviation and empowering entrepreneurship around the world.

Musicians like Rocky Dawuni, Aziza & the Cure, Patrick Bradley and Tiffany Parker are donating part of their album sales to the foundation.

If the general public wants to get involved and support the Whole Planet Foundation mission, they should know that fundraising is an option. People can create a fundraising campaign page in order to support entrepreneur communities around the world, and spread the word to their family, friends and colleagues.

Partnerships are an important aspect and pillar of the Whole Planet Foundation. These partnerships have helped the organization to support poverty alleviation throughout the world and use entrepreneurship as a crucial way to target poverty.

Diana Fernanda Leon

Sources: Whole Planet Foundation 1, Whole Planet Foundation 2, Whole Planet Foundation 3, Whole Planet Foundation 4, Whole Planet Foundation 5, Whole Planet Foundation 6, Whole Planet Foundation 7, Whole Planet Foundation 8, Whole Planet Foundation 9
Photo: Whole Planet Foundation

mozambique
The World Bank’s International Development Association (IDA) is not a bank in the traditional sense, but rather, a unique financial institution whose main objective is to reduce poverty and support development for those living in the bottom 40 percent. This goal can be achieved by offering concessional loans and grants to the world’s poorest countries, benefitting aspects like global education.

On July 24th, a second round of funding was approved and given to the Republic of Mozambique’s Education Sector Support Project (ESSP) in the amount of $50 million, reports the World Bank. Today, Mozambique is one of the first countries to receive a grant under the new funding model implemented by Global Partnerships, in which funds will be controlled through ESSP.

These grants are important initiatives in supporting ESSP to improve their access, quality and equity of education, which has grown tremendously from 67 to 82 percent between 2009 to 2014. Despite their increased registration of students within schools, challenges are present when it comes to the learning outcomes within primary education.

Education in Mozambique faces a number of challenges including low retention, a sub-optimal learning environment and overall management at a school-level.

According to the World Bank, the objectives of ESSP include “improving school readiness (through expanding access to Early Childhood Development programs); enhancing learning environment, through the implementation of a curriculum reform and additional teacher training; and enhancing local management and governance through increased supervision by districts, enhanced capacity of school councils, as well as the targeting of resources to achieve learning for all, with a focus on the most vulnerable.”

Currently, the World Bank’s efforts are grounded in sharing knowledge with countries around the world, focusing on seeing results in developing countries, reforming every aspect of their work to further improve communication and ensuring open access to this information through accessible and free websites and opportunities for discussion.

– Nikki Schaffer

Sources: World Bank 1, World Bank 2
Photo: ADPP

greenfield_microfinance
The attention of foreign entities intent on aiding the development of Sub-Saharan Africa (SSA) is often focused on providing basic services such as water, electricity and healthcare. And while rightly so, another crucial ingredient for development in Africa is finance. Access to capital for the average African would allow households and small businesses to leverage their savings and earnings to increase productivity, earn higher incomes, create jobs and ultimately, stimulate economic growth.

Unfortunately, SSA has the lowest level of access to finance than any other region in the world, with an average banked population of 24 percent. Microfinance institutions (MFIs), organizations that offer financial services to the poor, are a promising solution to this gross deficit.

Microfinance has played a large role in South Asia with a mixed record. Initially termed micro-credit, it was viewed as a panacea to world poverty when it began to rapidly grow 15 years ago. Since, people have realized that while such loans can empower women and help entrepreneurs, they are not a magic bullet against the characteristics of poverty such as a lack of healthcare, education, access to power, clean water and a reliable food source. In addition, over the last 15 years it has not been uncommon for lenders to charge usurious interest rates on these loans, creating vicious cycles of debt for borrowers.

As the perception of this financial instrument was tempered, no longer viewed as a ‘magic bullet’ to poverty, the term micro-credit became microfinance and the concept was relegated to the toolbox of poverty alleviation. To be clear, microfinance, if not abused by exorbitant interest rates, and if it works within a framework of poverty reduction, can dramatically help the poor by giving them access to financial services.

Access to financial services that are not traditionally available to the poorest segments of society is what microfinance is all about. And that fact is no different in SSA, where most MFIs are greenfields. Greenfield MFIs are local institutions formed by holding communities in communities without pre-existing financial infrastructure, staffs, clients or portfolios.

Microfinance made its debut in the region in 2000 when ProCredit Holding, a German banking group with 21 banks operating in developing and transitioning economies, opened a bank in Mozambique that offered microfinance services.

Since then, many companies have followed suit. In 2006 there were seven Greenfield MFIs in SSA, staffing 1,564 people, with 37 branches, and 220,337 deposit accounts. By 2012, there were 31 Greenfield MFIs in SSA, with 11,578 staff, 701 branches, and almost 2 million accounts. In that time the Gross Loan Portfolio increased from $57 million to $769 million.

To begin a Greenfield MFI in the region, $6-$8million is required over the first 3-4 years of operation. And only after months 42-48 do they emerge fully sustainable. While this investment may seem daunting, research shows that the average SSA Greenfield MFI has been able to sustain fairly rapid revenue growth. Over its first 60 months, it will increase its revenue by $500,000 every 6 months, reaching $5 million by its 5 year anniversary.

The growth of microfinance in SSA is undeniably impressive. The Greenfield MFI model has come a long way in a short time in Africa. And while in the grand scheme of a region containing around 1 billion people, these numbers seem meager, the financial performance of these Greenfield MFIs indicate a future in which Africans have much greater access to capital, and therefore a brighter future.

– Connor Bohannan

Sources: Business Insider, International Finance Corporation, Making Finance Work for Africa, The Consultative Group to Assist the Poor
Photo: European Commission

microfinance
Microfinance has become a popular economic strategy for those in the “bottom of the pyramid” hoping to obtain a better quality of life through entrepreneurship and investment in rural business. But microloans often trap loan recipients in cycles of indebtedness, thus exacerbating the poverty loan providers claim to strive to reduce.

The primary problem with microloans is that recipients often use them to purchase basic necessities, like food and clothing, rather than for entrepreneurial ventures or local investment. In South Africa, 94 percent of microloan funding goes to consumption, not investment. This leaves recipients without the means of generating the income to pay back the loans (or the artificially high interest rates that come with them), which necessitates taking out new loans to repay previous ones. Because of the poor economic conditions in impoverished regions, people often have no choice but to enter into this cycle of debt.

Even when microloans are used towards developing business, loan recipients often face obstacles that make realizing revenue difficult or impossible. “When micro-loans are used to fund new businesses, budding entrepreneurs tend to encounter a lack of consumer demand,” writes Jason Hickel, an anthropologist at the London School of Economics. “After all, their potential customers are poor and low on cash, and what little money they do have gets spent on basic goods that tend already to be available. In this context, new businesses end up displacing already-existing ones, yielding no net increase in employment and incomes. And that’s the best of the likely outcomes.”

The worst, he writes, is similar to the outcome described above: borrowers end up failing and entering into cycles of indebtedness to pay off previous loans.

One challenge facing loan recipients is a lack of coherence among labor markets in developing regions. Enterprises launched by individuals have a high rate of failure due to a lack of business experience and resources with which to invest or pay back debts. Enterprises launched by communities, however, are much more likely to succeed, the result of collective utilization of resources and solidarity among workers.

An example is Bangladesh’s BRAC, the world’s largest development NGO. BRAC organizes poor communities using their own resources and enables them to create their own supply structures and manage their own industries. One of BRAC’s enterprises, Aarong, has grown into one of Bangladesh’s largest retailers and now earns annual revenues of over $60 million. Aarong’s supply-chain coherence and community support empowers rural artisans, allowing them to create and sell goods on a globally competitive level without having to launch individual initiatives by taking out high-risk loans.
Because NGOs like BRAC are largely self-funded, it is unlikely for them to establish a presence in every developing or impoverished region. This means that for rural workers to have a chance to succeed, local investment in small business needs to be accompanied by state assistance, strong subsidies and assistance for failed entrepreneurial endeavors.

One such example is affordable agriculture insurance, which has the potential to help rural farmers whose operations are threatened by conditions out of their control, like violent climates. Because agriculture is a main source of income for rural communities (over 2 billion people depend on “smallholder” farms for income), they often need to take out loans to maintain the resources to cultivate crops. Because agriculture is a high-variable venture, farmers are often left without the means of recovering lost investments. Insurance coverage for these farmers enables them to invest in riskier but more lucrative endeavors and makes it more likely for credit to be extended to them on more reasonable terms.

Business-friendly initiatives like agriculture insurance present opportunities for American companies to invest in developing regions while making it more likely for rural entrepreneurs to succeed. The more U.S. investors engage in activities such as these, the more likely it is for new markets to develop, and the more likely it will be for development aid to effectively improve business conditions in developing countries.

– Zach VeShancey

Sources: The Guardian 1, Center for Financial Inclusion, The Guardian 2
Photo: The Guardian

MicrofinanceIn 2006, MIT Professor Muhammad Yunus was awarded the Nobel Prize for his work in the creation of the Grameen Bank. The Bank was created primarily to microfinance, or provide small loans, to the impoverished in Bangladesh. Today, over 97 percent of Bangladesh’s villages have a Grameen Bank presence, a whopping 7.5 million people have borrowed from the Grameen Bank and 65 percent of the borrowers “clearly improved their socio-economic conditions.” Yunus has even advocated for credit to be considered a human right because of the extent to which it can help people deal with their financial situations.

Prior to the emergence of this practice, the term “finance” largely carried the connotation of large banks, governments and corporations, and their respective handling of money or value. Liabilities, assets, savings, loans and other banking concepts can all be categorized under finance. So then, what exactly is microfinance?

Microfinance is the practice of bringing financial systems that are commonly used in the developed world, and applying these concepts on a much more personal and micro-scale. While we typically think of finance as a system that deals with large sums of money and organizations, microfinance is quite different because it deals with much smaller denominations of money and groups or individuals.

In practice, microfinance institutions or programs can differ in their specific models of operation. For example, Kiva is a microlending institution. It operates on donations, and any donor can personally become involved by browsing through testimonials and deciding whom to fund. On the other hand, the Grameen Bank no longer takes donations, and the Bank itself is actually 94 percent owned by the borrowers themselves. The majority of microfinance institutions deal primarily with microcredit, with most extending credit to women. About 97 percent of Grameen Bank’s loans are offered to women.

One point of criticism is the very high interest rates sometimes charged by various microfinance institutions; in some cases, the rate is over 50 percent. However, many argue that this is necessary to cover administrative and risk-taking costs. Defendants of the interest rates contend that participating in the loan program does not proportionately diminish the received benefits based on interest rate.

The benefits of providing financial services – often taken for granted – are unmistakably significant. The first benefit, as told by Mr. Yunus himself, is the mental and psychological stimulus a loan can give a person. The recipient of the loan becomes more independent and less inclined to feelings of marginalization. The second benefit is an increase in small businesses and economic activity in the villages. For some, small loans serve as the building blocks for small businesses. For others, the loans help pay for large goods or services like schooling, or healthcare costs, among other things. Providing small loans at affordable rates allows people to have more purchasing power than they might have otherwise, and to make purchases once considered not within their means.

An MIT study titled, “The miracle of microfinance? Evidence from a randomized evaluation,” was highly critical of the actual effects of microfinance versus the observed perceived effects before the study. Those conducting the study found that microfinance had some benefits for helping businesses increase profitability, and in increasing household income. They also found that household spending increased on durable goods, meaning goods that can be used more than once like cooking pots and mosquito nets. However, the MIT study found no significant changes in women’s empowerment, education or health. Finally, the study found that the adoption rate for microfinance was around 38 percent, indicating that many people still preferred to take out informal loans from other parties or family members.

Despite the critiques, microfinance has emerged as an innovative tool within the largely unchanging financial sector. By giving the impoverished access to financial services, the affected begin to have more opportunities and resources to turn to when dealing with personal or small business finances.

There are 2.5 billion people worldwide who are “unbanked” according to the World Bank. High costs, bureaucratic barriers and physical distance from banks facilitate this huge gap in the number of people with access to financial services and the total population. Microfinance has the potential to help bridge this gap by empowering the poor and providing them with more tools to help themselves. Although it may not be a miracle, it’s certainly better than nothing at all.

– Martin Yim

Sources: PBS, Kiva, Grameen Bank, MIT, World Bank
Photo: Flickr

Asia Microfinance Forum
For two days, 500 delegates from 36 countries attended the 2014 Asia Microfinance Forum in Shanghai to discuss financial inclusiveness and the future of microfinance in Asia. Themed “Financial inclusion in Asia: Creating dynamic financial ecosystems for the poor,” the event showcased speakers from national organizations, non-profits, governments and individual innovators to speak on the role of microfinance in helping the poor.

The event began on August 5 when Chairman of the Banking with the Poor Network, Chandula Abeywickrema, began the event with his remarks at the opening session. Then, Duan Yingbi, President of the China Foundation for Poverty Alleviation, spoke on the status of microfinance institutions in China.

Yingbi noted there are over 300 MFIs in China, most of which started seeing significant growth after 2005. Currently, Yingbi says, commercial banks are very active in China, but the MFI industry is not well defined (thus the impetus for inviting professionals to help define the future of MFIs in China and Asia).

Additional speakers went on to talk about the role of microfinance in China and elsewhere in the continent, and emphasized serving the poor and innovating as two clear goals.

On the last day of the forum, Eric Duflos, Regional Representative for East Asia and the Pacific at the Consultative Group to Assist the Poor; Vijayalakshmi Das, CEO of Ananya Finance for Inclusive Growth & Friends of Women’s World Banking, India; Arjuna Costa, Investment Partner at the Omidyar Network; Dennis White, President at the MetLife Foundation; Chuchi G. Fonacier, Managing Director of Bangko Sentral ng Pilipinas and Mr. Bai Chengyu, Secretary General of the China Association of Microfinance, all spoke on the unique position of microfinance institutions in Asia.

Speakers commented on the importance of inclusion amongst MFIs, digital finance and risk-management. “I am sure if we have a partnership between all the stakeholders, we will be able to achieve all we wish to achieve,” Das said.

All in all, the event sponsored speakers who offered insights into the role of MFIs in countries like India, China, Indonesia and Bangladesh. It was an important stepping-stone for many MFIs, as China expressed interest in creating a national framework for MFI activity.

Increasing microfinance options for the poor, particularly those in rural communities, can help increase opportunities for social mobility and poverty reduction. Asia has a large share of the world’s rural poor, so increasing the quality and quantity of MFI services will undoubtedly help the poor connect with the financial resources they need to advance their human development.

– Joseph McAdams

Sources: Microfinance Focus 1, Microfiance Forum 2, Microfinance Forum 3, The Australian
Photo: Microfinance Focus

microcredit
A new experimental study, out June 10th of this year, examines how microcredit, or the lending of small amounts of money at low interest to new businesses in the developing world, may not help jump start poor populations’ financial growth as much as some may think.


The authors of the study, Bruno Crepon, Florencia Devoto, Esther Duflo, and William Pariente, randomly assigned 162 villages in rural Morocco to either receive microcredit (these villages would serve as the treatment group) or not to receive it (and these would serve as the control group).

The researchers, who are affiliated with the Abdul Latif Jameel Poverty Action Lab (or J-PAL), found that microcredit does not lead to families and businesses exiting poverty in the long-run.

This is in opposition to a similar study conducted by Shahidur Khandker and Hussain Samad of the World Bank in March 2014 which found that microcredit increased personal expenditure, labour supply, household assets and schooling of children in impoverished communities of Bangladesh.

Furthermore, Bono, whose humanitarian work in developing nations is highly documented, has lauded microcredit as an effective means of alleviating poverty, stating, “Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children and her extended family will eat for a lifetime.”

However, the researchers at J-PAL found that microcredit decreased the amount of time Moroccan laborers spent on work. The effect on investment was greatly offset by a reduction in income from wages. The researchers concluded that access to microcredit, at least in Morocco, did not result in income gains, personal consumption or education of the youth.

Writers at the Economist are attempting to analyze the conflicting results of these two studies, and learn why they produced such significant differences. One theory is that microcredit may only reduce poverty and increase income in the long run, making short term studies irrelevant and ineffective at gleaning a meaningful answer.

The two studies also took place in two very different countries on separate continents. One can reasonably conclude that there may be social, environmental, or political factors at play, as well. Economists refer to this issue as “external validity,” meaning the extent to which a study’s results are generalizable outside of its given context. The effects of microcredit may not be clear until researchers readily take place, setting, and social and political structures into account.

Further research is needed to know whether lending sums of money to businesses in poor areas of the developing world may actually be a beneficial policy. Crepon and his co-authors are currently planning a follow-up experiment to study the long term implications of microcredit. All involved hope to find some answers to these questionable methods of alleviating global poverty.

-Paige Frazier

Sources: The Economist, The World Bank, MIT Economics, Look to the Stars
Photo: African Microfinance Network

kiva
A spinach farmer in Cambodia, a hot dog stand worker in Nicaragua, a fish seller in Uganda, a carpenter in Gaza and a bee keeper in Ghana were microfinance organization Kiva’s initial borrowers in 2005. However, Kiva has grown in scope and microfinance methods by combating global poverty from multiple angles. This week alone, 27,704 lenders made loans through Kiva.

Today, Kiva’s mission to alleviate global poverty through small-scale lending has grown far beyond its original scope. In the eight years since its inception, the nonprofit has sponsored loans totaling over $540 million. These loans fund over 1.2 million borrowers in 73 countries.

In its eighth year, Kiva is a leader in platforms for social improvement and poverty alleviation. The organization aims to empower low-income borrowers around the world to begin their own businesses, invest in home improvement and clean energies and more through small-scale loans of greater than $25.

Lenders are able to browse the profiles of people around the world who are seeking loans, and choose who they would like to support. Lenders then receive updates on the progress of their loan, connecting them to a larger global community dedicated to supporting low-income earners.

This concept of small-scale lending can be defined as microfinance. Microfinance is loans, savings and financial services for the poor or those without access to traditional banking systems, and the idea that these small-scale funds ultimately help to lift low-income borrowers out of poverty.

While effective in many ways, microfinance can also be limited in its reach due to high-risk costs and loans for more impoverished borrowers. In some situations, microfinance may not be the ideal way to assist borrowers, and cannot function as the only tool to fight against global poverty. In order to combat these limitations, Kiva seeks to be a more flexible form of microfinance by moving past economics and deeper into issues of agriculture, education and clean energy.

Currently, only 0.3 percent of microfinance borrowers take out loans for energy solutions. Kiva aims to combat the barriers of high cost and availability faced by low-income earners by taking on more creative, pay-as-you-go lending systems for borrowers. With credit delivered in more flexible ways, users are able to benefit from technologies while making their payments over longer periods of time.

Over the next decade, Kiva hopes to see clean energy products become regularities for its borrowers around the world. The ultimate goal for the nonprofit is the use of sustainable supply chains, improvement of health and well being and falling prices for renewable energy products.

Kiva has also increased awareness of microfinance in educational communities around the world. In August 2013, the organization launched Kiva U, a movement for students and educators dedicated to changing the world through microfinance. The initiative provides toolkits, resources and potential curriculum to promote communities where high school students, college-age students and teachers can connect and share ideas.

In October, Kiva hosted its inaugural Kiva U Summit, where 150 students and teachers came together to connect and discuss microfinance in an evolving world. In the same month, Kiva hit its one million lender milestone.

Through creative mechanisms and user-oriented strategies, Kiva has proven the potential for microfinance success in addressing low-income communities.

“Our approach is to see what works and share the results with a global audience,” Kiva President Premal Shah said. “Ultimately, our hope is to get high-impact products to people who have been too long overlooked, and demonstrate their success to the global market.”

 – Julia Thomas

Sources: The Borgen Project, Kiva, Kiva(2), Triple Pundit, MIT Press Journals
Photo: Design to Improve Life