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. Some, CSTN has investigated and, in the past, has 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:
>>Luis Humberto is single and lives in the family home in the parish of San Roque, which is part of
Atuntaqui Ecuador. San Roque is a place where indigenous people make handicrafts such as dream catchers, tapestries and local blouses. However, Luis Humberto learned from his father another way of earning a living. For the past several years he has been working as a mobile DJ, providing musical entertainment for parties and family events in the local neighbourhood and surrounding areas. He needs a loan to buy new, more powerful amplifiers.
CSTN portion: $100.
Hanifa lives and farms in Kumsingir Tajikstan, just as she has been doing for the past 25 years. She is divorced and has a grown, married son who, along with his wife, helps Hanifa manage and sell their vegetable crops in the local market. It's a growing business that supports the whole family, and Hanifa wants a loan to stock up on a good supply of seeds and fertilizers.
CSTN portion: $100.
>> Ismail is the head teacher at Bweyogerere Secondary School, a mixed school of 800 students located in the Wakiso district of Uganda. On behalf of the school, Ismail has requested a loan to cover the cost of installing and maintaining a UV water filtration system to provide clean drinking water for its students. Currently, the school has to buy firewood to boil water for drinking. Installing a water filtration system will save the school money paid for firewood as well as generate carbon credits. These savings will go towards repaying a loan sufficient to purchase a UV water treatment system with a 750 litre tank. And school fees will cover the balance of the costs of repaying the loan. Ismail ultimately hopes that having access to safe drinking water will reduce the number of children that fall sick from water-borne diseases, thereby improving their attendance and concentration.
CSTN portion: $100.
>> Vantha is a married woman and the mother of two dependent children. To meet the family's daily needs, Vantha and her husband grow and harvest rice on two hectares of farmland near the village of Trapeang Chong, Bakan, Pursat Cambodia. Having sucessfully repaid two previous loans, she has a good credit history. Now, thanks to a water loan program with a special rate that is offered by Hattha Kaksekar Limited (HKL), Vantha is encouraged to build a hygienic latrine for her family home, and this latest loan will go towards that project.
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.