Kiva.org is a website that seeks to link people wishing to get inolved in microlending with those seeking funds. A microfinance institution can put profiles of entrepreneurs on the website, and then anyone with a credit card can then lend money to them. Money can be lent in multiples of $25, from $25 up to the full amount requested. The lender receives no interest, the entrepreneur pays 16% which is used to cover administration costs. According to Kiva, they have a 100% loan repayment record so far.
Recently the Economist published an article reporting how micro-finance has become so successful that it may now be attracting aid money that it no longer needs and which may be put to better use elsewhere. Will sites like kiva improve or exacerbate this situation? I'd imagine it can only help if it pushes the larger international institutions out of relatively "safe" micro-lending and into riskier areas.
1 comment:
16% seems high if the donor is not getting anything - would be interesting to see why this costs so much - its unlikely to be high profits or everyone would be at it. Maybe they do a lot of screening?
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