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:
>> Dorcus is 25 years old, the oldest in a family of six children. Her mother passed away when Dorcus was 12 years old. Despite that sad fact and the family's financial instability, Dorcus managed to complete her Nairobi Kenya certificate of secondary education (KCSE) in 2008. Then, she could not further her studies until she was lucky enough to discover and join Digital Divide Data, and now she is back in school at Kenyatta University pursuing a Bachelor’s Degree in Tourism and Hospitality Management. DDD enables talented youth from low-income families to gain higher education and access professional opportunities by offering an intensive work-study program that includes a partial scholarship to its students. The partial scholarship provided by DDD is not sufficient to meet all university costs, however, and thus Dorcus needs a loan to cover the remaining fees.
CSTN portion: $100.
>> Jose Concepcion is 30 years old, married, and lives with his wife and their two children in one of the small villages located in the municipality of Gracias, Lempira. Honduras. He has been growing coffee for five years, producing his crops on land away from his home. He sells the production in wet, dry, and Pergamino beans. This is Jose's second loan and with it he will buy fertilizer to improve production and pay hired workers who contribute to the maintenance of the farm. Improved production should lead to improved income. Jose's goal is to expand his farm and his income so that his children can graduate to and from higher education and thereby have greater chances to excel at whatever they choose to do in life.
CSTN portion: $100.
>> Dana is a 20-year-old single woman from a small village near Nablus city, Palestine. Dana's sister has been the breadwinner for the family since their father passed away some time ago. She is employed in the public sector, but her income is barely enough to cover family needs. Nevertheless, Dana has managed to stay in school and is currently studying construction engineering at the local university. She wants to take a degree and eventually find a job to help with family expenses. This loan will help her to pay the university fees for the new semester.
CSTN portion: $100.
>> Faustina is a 32-year-old single woman and trader who sells sweets, soft drinks, biscuits, and provisions from a road-side shop in Kaneshie, Ghana. She has been in business for the past three years, and she dreams of growing the business greatly within the next five years. Faustina has a three-year-old son, and she needs to earn sufficient income to raise her son and pay for his school fees when the time comes. Currently, she lacks the capital needed to expand the business, but this loan will help introduce a variety of new products so that she can meet the growing needs of her customers while gradually increasing her income.
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.