CSTN has always been about helping individuals fulfill their solo travel dreams. After twenty years of connecting internationally with the global tourism industry and with other solo travelers, I, as CSTN founder, began thinking of such singular journeys in a less self-centered way.
Doubtless, there are few travelers – solo or otherwise – who have not been dismayed to see sights of extreme poverty and need in many places we visit. Thankful for our blessings, we've wished to do something to help ease such abject circumstances. But what? There are, of course, dozens if not hundreds of charitable organizations whose aim is to do good in developing countries. CSTN has investigated some of these charities and, in the past, raised funds for a few, but only in a sporadic way.
In 2008, I began searching for an organization that would provide a compatible and ongoing way of adding philanthropy to the CSTN mandate. Finding Kiva was my first introduction to the concept of micro-financing.
Kiva is about inspiring and empowering individual dreamers one by one. Through a system of small, person-to-person loans, people who otherwise have no hope of getting credit, have an opportunity to lift themselves out of poverty and fulfill their personal dreams. Individuals helping individuals help themselves – a perfect fit for CSTN.
Since April 2008 CSTN has been lending 50 per cent of every registration fee to individual entrepreneurs via Kiva. A report on funding is regularly updated as follows:
>>The seven members of the Kotognogontala 3 group are married women who, on average, are 50 years old with four children. They all live mostly in traditional families in Kamalen Sirakoro, a populous area in the city of Sikasso, the third administrative region of Mali.
They are on their third agricultural loan cycle, and previous loans have been repaid in full.
The selected crop for this loan is ground nuts featuring Mrs Anchita who is sitting in the first position from right to left in the photo. She intends to use her loan to buy fertilizer, herbicide, and pay for plowing to maintain 0.75 hectares (about 1.85 acres).
After harvest, the crop will be sold at village level and in Sikasso, after which she expects the profit will pay off her loan and also help her husband with daily expenses.
CSTN portion: $100.
>> Gayane and her husband are experienced farmers living in Khoronq, a village in the Armavir region of Armenia. Gayane owns a greenhouse where she cultivates tomato, cucumber, and eggplant. Gayane needs to take care of her greenhouse, which is the main source of family's income. A loan of $1,500 is needed to purchase a polyethylene cover and wires for greenhouse repairs and upkeep.
CSTN portion: $75.
>> Ma Gyi Kone Village is located in Central Myanmar’s Na Htoe Gyi township. This group currently has 40 village customers, six of whom are CBO (Community Based Organization) committee members helping lead the loan program in the area. Each villager will receive about $190.
A new loan would enable this community to buy seeds and fertilizer for crops such as bean, betel and onion. This will improve their yields and therefore crop sales, leading to an increase in the farmers' incomes. Villagers hope to use this additional income to dig a well to increase the village's access to clean water. Currently, village members must spend $15 per month and too much time collecting clean drinking water.
CSTN portion: $100.
Excerpts from field report by Kiva Fellow, Meg Gray, working in Nicaragua with Kiva field partner CEPRODEL
In Nicaragua every road has character, and usually this "character" makes it hard to get to CEPRODEL's clients. Now, besides being an inconvenience, why does this matter? It matters because bad roads are one of the factors that contribute to high operating costs for a micro-finance institution (MFI). Here are several more reasons [why CEPRODEL charges 36% interest].
Populations are often very spread out. Even with centrally located offices, many clients have no way of visiting the branch and thus [loan officers must travel to individual clients].
The administrative cost [time, manpower, and paperwork] of a loan is fixed no matter how small it is.
Frequent repayments (often daily or weekly) are more labor intensive. Many CEPRODEL loan officers spend every afternoon walking or driving from business to business collecting repayments.
Now, how are MFIs supposed to pay for all of this? Yes, they could keep seeking out grant money year after year, but I, for one, would like them to be sustainable. The only way to do that is to charge enough interest to cover operating costs.
While rates may seem ridiculously high, as long as we have loan officers needing to drive 30 kilometers through the mud on a motorcycle to spend an hour (or more), all for a loan of $250, then yes interest rates are going to seem high. But financial services will also be reaching people who have never had these opportunities before.
Diane: At first, I was rather alarmed to find that interest charged to recipients seemed excessively high, but the above explanation puts things in perspective. Interest and fees do vary considerably between field partners, and Kiva lets lenders (like us) check the fundamentals of all field partners. Those checks include interest and fee comparison charts, as well as profit margin declarations. Incidentally, just to be clear, we lenders invest the capital but do not receive interest on return. And Kiva operates solely on voluntary donations.