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:
>> Şerife is married and a mother of three. She and her family live in Turkey. In order to make a contribution to the family budget and help her children with their school needs, Şerif sells a variety of household products via a network system. This is her third loan. With the help of her previous two loans, she has learned the value of buying products in bulk and is convinced that this is the best course of action toward increasing her profit margin. Thus, her entrpreneural nature expands with each successful business venture.
CSTN portion: $100.
>> Bernadette is the head teacher at Rock View School located in Tororo Uganda. The school wants a loan to cover the cost of installing and maintaining a UV water filtration system, which will provide clean drinking water for its students. Currently, the school uses firewood to boil and obtain drinkable water for the children. Installing a water filtration system will save the school money in the long-term as the cost of firewood will be reduced. The loan will enable the school to purchase a UV water treatment system with a 1000-litre tank, which will store enough clean drinking water for the students' daily needs. Bernadette expects that having access to safe drinking water will improve her students' concentration and attendance by reducing the number of children that fall sick from water-borne diseases.
CSTN portion: $100.
>> Sadio's Group was created in September 2013 to encourage small business activities in a rural area of Senegal. Standing to the right of the photo and raising her hand, the featured borrower, Sadio, is 47 years old. She is married and the mother of 7 children – 4 girls and 3 boys. This loan permits her to get into retail selling of various goods such as clothing, footwear, and kitchenware products. Sadio will travel to major cities to buy her wares at wholesale prices and then resell at retail prices in the local villages. The profits she gains reinforce her business activities, pay the interest on credit, build savings, and gradually improve the living conditions of her family.
CSTN portion: $100.
>> Ergin comes from a minority community in Kosovo. Married with 2 children, aged 3 and 16, Ergin is a hard-working man and caring father who puts all his efforts into improving his family's welfare. As the sole provider for the family, Ergin runs a small business selling recycled papers and plastic bags. Thus far, the business is stable and through it he generates a sustainable income that supports the family. He is applying for a third loan with which he expects to successfully expand his business in the market and thereby increase revenue. He hopes one day to afford to send his children to college.
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.