Kiva pays big dividends in Third World

Retired Cranbrook mining engineer sings the praises of micro-credit concept

It’s the latest way of helping poverty-stricken Third World people to help themselves, and one of its most enthusiastic supporters is a retired Cranbrook mining engineer who is hooked on Kiva as a way of raising hope in the developing world.

Antoine Beurskens came to Cranbrook five years ago after retiring from Teck in Fernie. He had worked in underground mining for 26 years, and also worked in mining in Africa for 12 years. This latter exposure to the Third World was what sparked his interest in development work.

Beurskens first came across Kiva in 2011 when he attended a micro-credit conference in Calgary. One of the speakers at the conference was Kiva co-founder Matt Flannery who, on a trip to Africa in 2003, found out that lack of access to start-up capital was a major stumbling block for would-be Third World entrepreneurs.

This was a “call to action” for Flannery and Jessica Jackley, who made the first Kiva loans totalling $3,500 in April 2005 and were paid back by September of the same year.

At this point, the co-founders realized they had developed a viable micro-credit concept and Kiva, which means “unity” in Swahali, was born.

Beurskens says he loves the concept too.

“I favour projects where there is added value,” he said. “You can simply sell a bottle of pop or sell anything. But if you gather the ingredients together and bake a loaf of bread, then you have added value and that’s better.”

Since becoming involved with Kiva, Beurskens has become a Kiva evangelist, making hundreds of Kiva loans himself and recruiting dozens of new members to the Kiva program. The key to Kiva’s success is that the loans are small, usually in the $20 range, and because Kiva’s staff strictly monitor the program, the loans are usually paid back in full in a matter of months or even weeks, encouraging the lender to make more loans.

“More and more we’re learning that aid programs that only give without the participants playing a major role are not effective,” Beurskens said. In fact, many Third World loan schemes fail completely or the money ends up in the wrong hands, which undermines Third World lending, period, he says.

“But Kiva helps its clients by guiding them in selecting a project that will earn them a living,” Beurskens explained.

As a result, Kiva and its “field partners” grant micro-loans for a wide variety of projects, ranging from business start-ups like selling charcoal, used clothing, food or animal feed, to higher-end projects like cellphones, computer software and agricultural tools. As of March 2013, Kiva had distributed $408,326,900 in loans from 896,353 lenders. The current repayment rate from all the partners is 98.98 per cent, according to Alexa, a Web information company.

Kiva covers its own costs through small donations from thousands of people (separate from actual loans) and large donations from big organizations like Visa, Chevron, and the Skoll Foundation. Some 80 per cent of Kiva’s loans go to female entrepreneurs because women, particularly mothers, have the most to gain from micro-credit. Women often suffer the most from poverty as traditional loaning and financing practices often favour the male of the family unit.

Interest rates charged by field partners are often high, but they are still lower than most local lenders, whose rates are out of reach for many of the recipients. Beurskens says Kiva isn’t perfect, but is usually much better than the alternative.

“Kiva is just the pipeline. When you dig deeper in the way MFI’s (micro-finance institutions) do their work, you’ll find that dealing with small loans is very expensive and most MFI’s, including Kiva, are providing quite a few services beyond just supplying loans.”

Anyone interested in finding out more about Kiva should check its website. And if you do, what is the reward?

“I suggest you’ll have an idea if you look at the hopeful faces of the people looking for sponsors,” said Beurskens. “Hundreds of thousands of them have received loans and paid them off.”

If ever the developing world is going to achieve the status of the West, Kiva is one of the best ways to help them do it, he says.

“Kiva enables everybody to help people all over the world to improve their lives without really spending much money. This puts us in a position where we really cannot remain sitting on the sidelines.”