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:
>> Judid Jovanny, aged 42, is married without children. She lives in a rural area of the Oyotún District, Chiclayo Province, the Lambayeque Region on the northern coast of Peru. Most of the people there make a living from agriculture and livestock breeding. For the past 10 years, Judid has been earning money preparing food from her home. Now, she wants a loan to purchase furniture and set up a place for attending to the public. Judid thinks this investment will help increase her productivity and ability to provide a better service to her customers.
CSTN portion: $100.
>> Rudianto lives in Kuantan Riau province on Sumatra Island an area where there is little access to clean water. He runs a pharmacy and as such is very concerned with the health of the people. That is why he started to sell Nazava Water Filters that can be used to filter dirty well, tap, or rain water so it becomes safe to drink without boiling. Rudianto has been selling the filters through a network of health centers, markets and bazaars. With this loan he can buy up to 400 filters and provide safe drinking water to around 2000 people
CSTN portion: $100.
>> Louay is a 40-year-old Iraqi citizen living in Lebanon. He is married and the father of two children. He has been working in creating, manufacturing and repairing jewelry since 2002. He was in partnership with a friend but decided to buy him out and develop the business on his own. Louay now designs, creates, and markets the jewelery, and he needs to buy raw gold and specialized tools for producing high quality products. He hopes to open a retail shop and have his name well known in the jewelry design business.
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.