Wednesday, November 2, 2005

Micro-credit in the information age

Quite ingenious, really. Many know of the proliferation of micro-credit banks in the developing world -- banks which specialised in lending tiny amounts of money to the rural and urban poor, who then used the seed money to begin a small-scale business and repay the loan. But few, I am guessing, have yet to hear about Kiva, an online service that taps the wealth of the West and connects individual donors to micro-credit services.

And what makes this even more special, perhaps, is the way it can be personalized. Individuals donate through PayPal, but the money doesn't go to a nameless, faceless person. Rather, the lender can receive regular updates from the people whom they are benefiting.

This last piece, of course, sounds an alert in my head. It's all very sanguine and nice, but how do you REALLY know that these are real people and not a corporation's creation? I mean, really -- how many villagers in Africa are literate enough in English to dispatch weekly mail to a donor? Skepticism, perhaps, and maybe even hubris (who is to say that English is that hard to master), but nonetheless this seems a little far-fetched.

There's a caveat -- if the business can't repay the loan, your loan becomes a gift. But the site assures us that thus far, no loan has defaulted.

Quite interesting, and well worth some consideration. It appears to only be engaged in Uganda right now, but there seems to be a great potential here for change.

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