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

Connecting Globally With Kiva

By Diane Redfern

Updated April 2015: 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 – October 2014 to February 2015

>> Mohirzhon in TajikstanMohirzhon is hard-working, married with three young children. For the past two years he has been busy establishing an agriculture-based busines, mainly growing vegetables for resale. He is the sole income earner for his family and is earnestly developing this business as a means of increasing revenue and thereby improve living conditions for the whole family. He need this loan to buy mineral fertilizers for the new sowing season.

CSTN portion: $100.

>> Mayra in El Salvador Mayra Janeth has a small general store in El Salvador. With a previous loan she got the store up and running and was able to improve the family income. Now, with a growing customer base, she has decided to take out a new loan to buy larger stocks of grocery products such as eggs, rice, bread, among other stapes. She also wants to stock up on snacks, sweets, and juices. Marya has found the prudent borrowing has allowed her children access to a better life and education.
CSTN portion: $100.

>> Waseem lives in Sana'a Yemen Waseem is a 29-year-old single man who lives with his family in a rented house in Sana'a city Yemen. The house needs better furniture and home appliances. Waseem works in the public sector and with his salary he could furnish part of his house but needs financial support to complete bedroom furnishigs. As a result, he applied for a loan. He is repoted to be a responsible and active young man determined to get the job done for the family. When that task is completed, he dreams of getting himself in position to marry soon.
CSTN portion: $100.

>> Alik is married, has one young son and drives a taxi in Sisian, a town in Armenia. Using his own car, Alik provides Sisian-to-Yerevan transit for local people. He needs a loan to keep the car in good running condition so as to continue his taxi business. The loan will purchase four new tires and cover the cost of renovating the engine. He has now been approved for a start-up loan within the framework of a new joint initiative between Kiva and SEF International. The start-up loan program provides loans with soft conditions to informal businesses that do not have access to credit products.
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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