One of the greatest obstacles faced by people living in poverty all around the world is the lack of access to the resources they need to create opportunity for themselves and their community.
But microloans, an innovative new approach to making loans to people without access to traditional banking systems, is proving to be a game-changer for hundreds of thousands of people who have the potential to change their lives – and communities – forever.
Full Frame In Depth: Microfinance – Changing the World One Loan at a TimeOne of the greatest obstacles faced by people living in poverty all around the world is the lack of access to the resources they need to create opportunity for themselves and their community.
Organizations like Kiva.org, one the largest providers of microloans worldwide, are making small scale loans available to entrepreneurs all around the world. The funds for these loans are provided by individual lenders who contribute to a borrower’s campaign through microfinance websites with as little as $25.
“Pretty much in every country, this tradition exists – groups of people based on trust sharing money,” said Matt Flannery, co-founder of Kiva. “I became interested in this voyage of doing that on a global scale through the Internet.”
The most recent data from Accion International shows that 86 million borrowers worldwide received $40 billion in microloans in 2008. Economists estimate that there are currently closer to 100 million borrowers – mostly small business owners in Africa, India and Central America — using $50 billion in microloans to establish and grow their livelihoods.
“What we usually see with the microfinance story is incremental progress year after year,” Flannery said. “A lot of the loans are agricultural loans and with a typical agricultural loan, a borrower can grow their crops and yield by 20% over a year. So it’s not a rag to riches story, it’s a tale of a lifetime of progress.”
Kiva’s efforts to fund the dreams of people who do not have access to traditional banking and business networks seems to be paying off – 98.84% of the nearly $600 million of loans Kiva has made to date have been repaid in full.