Mennonite Weekly Review

A Christmas gift received in 2008 continues to give joy to my wife, Darlene, and me.

The gift was a donation made in our names to Kiva, a microfinance organization that makes loans to poor people asking for a “hand up.” Kiva is a Swahili word meaning “agreement” or “unity.”

With our Kiva Christmas gift worth $50, Darlene and I, along with some others, chose to lend Mrs. Sary Un $500. Sary is a Cambodian farmer who requested a loan to buy some duck feed and 280 ducklings to breed.

In one year Sary repaid her loan in full. During the payback time we received regular e-mails from Kiva saying how Sary was doing in her repayment commitment. Truly it was a year of joy hearing of her success!

Then, as our $50 was repaid, we chose other people to invest with rather than having the $50 paid out to us. The joy of hearing of a poor person’s success started all over as our $50 Kiva Christmas gift went to a young man in Lebanon and a woman in Ghana.

From the Kiva site I learned microfinance is the supply of loans, savings and other financial services to the poor. The World Bank estimates that more than 7,000 microfinance institutions serve some 16 million poor people in developing countries. The total cash turnover of microfinance institutions worldwide is estimated at $2.5 billion.

Potential for growth is enormous. This is because credit for poor people is often only available from informal sources at high cost. The majority of formal banks do not lend to poor people, because large loans to prosperous customers are more lucrative.

Studies have demonstrated that microfinance loans help poor households meet basic needs and protect against risks, improve household economic welfare and support women’s enterprise ability.

Looking deeper into the microfinance phenomenon, Mennonite Mutual Aid counselor and trust adviser Glen Kauffman directed me to the Calvert Foundation. From there I learned about MicroPlace where I found investors can make microfinance loans with a return of 1 percent to 3 percent interest, sometimes more.

With a click of my mouse I can help the poor and get a return. What could be better? The minimum investment is $20. Microfinance loans have a very low default risk.