Kiva – Exploring Non-Profit Microfinance

refinancingKiva is a non-profit company founded in 2005. They offer microcredit loans to people by connecting members of the public who are willing to lend with those who need funds.

Any company that seeks to change the face of finance in the way that Kiva does should be the subject of much interest from the Fintech industry. Fintech Reviews focuses on this innovative social enterprise and a few of its accomplishments.

What is microcredit?

Microcredit is the extension of very small loans to people who are impoverished or unable to raise low amounts of capital for their personal or business projects. At its most aspirational, microcredit is designed to lift people, and whole communities, out of poverty and start them on the ladder to self-sufficiency and a better quality of life. The jury is still out as to whether it achieves this goal consistently but there are notable success stories. Certainly, prior to microcredit, there were few options for people living below the poverty line who could not get access to capital investment.

Kiva’s Story

The company was founded by Matt Flannery and Jessica Jackley. They developed their idea in Africa and named the company Kiva which means ‘unity’ in Swahili.

Kiva’s first seven loans came to a total of $3,500 dollars. All of the entrepreneurs who borrowed at that time repaid their investors within five months. Kiva was born and, just one year later, they were in the process of facilitating $1 million in microloans.

Today, their website details some amazing statistics. In 83 countries, 2.4 million borrowers have utilised over $976 million worth of capital loaned by 1.6 million lenders. The repayment rate is an impressive 97%.

All of the money loaned through Kiva goes directly to the borrowers. The company is funded through voluntary donations, sponsorships and private investment.

Implications

Microfinance connects people and reinvents the idea of charity to elevate it from a donor/receiver power dynamic to a financial agreement between equal human beings. It fosters trust and multi-culturalism and favours women in places where it can be harder for them to access financial resources. Perhaps most importantly, it finances innovation on levels that were previously lost to the world through lack of support for growth. Who knows what the future holds if everyone is given a chance to participate and contribute?