© 2014 Connecting: Solo Travel Network & Diane Redfern. Information.

Connecting Globally With Kiva

By Diane Redfern

Updated May 2014: Latest Recipients | Loan Status | About Interest Rates

The Power of One to One

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.

What is Kiva?

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:

New Loan Recipients – March 2014 to April 2014

>>Raul Alberto lives in ColombiaRaúl Alberto has a business selling refreshing soft drinks. He and his wife and another relative deliver drinks to their customers (mainly neighborhood shops and schools) around the municipality of Yarumal, Antioquia, Colombia. Raul wants a loan to buy a motorcycle for transporting his products in a much more efficient way by shortening delivery times. This is how he expects to generate more profits for his business and provide better support for his wife and two children.
CSTN portion: $100.

>>Fe lives in Tangub City Philippines Fe is 55 years old, married and lives with her three children in the village of Garang, Tangub City Philippines. She supports her family by planting and harvesting fruits and vegetables, which she sells in the marketplace. She also raises a few pigs for sale. Fe requested a new loan to buy organic fertilizer and seedlings. She dreams of increasing her income and providing a better living for her family.

CSTN portion: $100.

>> Abel Antonio lives in El SalvadorAbel Antonio, aged 47, has dedicated himself to agriculture for many years. His principal crops are corn and beans. He sells his produce in markets near his home. His earnings cover some of his household expenses, but he needs to expand production in order to provide his family with a better quality of life. Abel is requesting a loan to purchase seeds, fertilizers, manure, and plague controls.

CSTN portion: $100.

>> Khin lives in CambodiaKhin resides in the Samrong Torng district of Kampong Speu province, Cambodia. She is a fifty-seven-year-old widow with two dependant children still living at home. Just like every other villager, Khin farms for her livelihood, but her current income from the farm barely supports the family. She plans to use the loan money to buy fertilizer to increase crop production, which she optimistically hopes will improve her family's condition and pave the way for her children to go to school.
CSTN portion: $100.

Loans and Payments to Date

Interest Rates and Sustainability – It's Just Business

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].

Usury or Necessary

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.


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