Website links lenders here with small businesses
Posted by Página do Microcrédito em 15 junho, 2007
Toronto man’s $200 helps Mexican barber open shop, one of many transactions through Kiva site
Ryan McMinn has a life similar to many busy professionals in Toronto. He owns two software companies, works long hours and lives in a downtown apartment on Richmond St.
Six months ago, he read a book by Muhammad Yunis, the Nobel Prize-winning proponent of microcredit, and was inspired to help fund entrepreneurs from poor or developing nations through small loans.
Teodoro Gonzalez has a life similar to that of many busy workers in Mexico. He owns a barbershop called El Farolito, works long hours and lives in a small house in Neuvo Laredo.
It was six months ago that he needed $1,500 (U.S.) to help make his dream of opening that barbershop a reality. Now, their lives are inextricably linked by a website based out of San Francisco called Kiva, Swahili for “unity.”
“I read Muhammad Yunus’s book and then came across Kiva.org. I thought that it sounded like a cool thing to do. So, I just kind of tested it out,” McMinn says.
The Kiva website contains hundreds of profiles of entrepreneurs from developing nations – their credit history, personal story, pictures and plan for action. Kiva is quickly gaining momentum in the online world with its quick and simple approach to connecting people through lending. In only two years, nearly 70,000 people have used Kiva to lend money to 11,000 entrepreneurs in transactions totalling $7 million.
There are 2,000 Canadians actively using the site.”It’s almost like an eBay type phenomenon,” says Nicholas Sullivan, author of You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. “It’s taking out the middleman and is direct one-on-one lending.”
After seeing Gonzalez’s profile on the site, where he wrote that he needed a loan to buy start-up equipment to open his own barbershop, McMinn chipped in with other online lenders and lent him $200 through PayPal.
Gonzalez has since repaid 33 per cent of the loan, and on his profile page writes about his dream to open another barbershop in the city with his brothers.
McMinn has also lent to five other people from countries such as Moldova, Bulgaria and Mexico. He says that even when the entrepreneurs do eventually pay him back, he intends to keep reinvesting in other businesses.
“The challenge I have always found with the whole charity thing is that you don’t get to see the results of what you’re doing,” McMinn says. “What I liked about this is that it puts the person who is asking for money on equal footing with me. It’s a lot more of a personal experience.”
Support for microcredit in Canada seems to be rising. A group called Agent of Change, comprised of young men and women from Vancouver, is biking from B.C. to Tijuana, Mexico, to help raise funds for microcredit initiatives, and in 2006 the Global Microcredit Summit was held in Halifax.
“It’s been really incredible to see how people have really supported this Internet public good,” says Premal Shah, president of Kiva.
Shah says that the reason many people don’t give to beggars on the street or charities over the phone is a lack of transparency.
“I don’t know where that money’s going to go. I don’t know if it will be used well,” he says. “So, we back away on giving.”But amidst the continuing hype of microcredit, there are some critics who aren’t convinced that microfinance is the real answer to poverty.
“This translates as moving the responsibility for antipoverty programs to poor people themselves, using borrowed money – and not only in the Third World, but here in the U.S. as well,” writes New York economic journalist Gina Neff, in an scathing article about microcredit for the Left Business Observer.
Shah admits that a simple approach to credit does not deal with issues of health care, training, racism and other variables that contribute to poverty. But he argues that initial data show that these loans are working, and helping people create better lives for themselves and their families.
“What we want to do is create a really transparent website filled with data, stories and over time, the impact, or the lack of impact, should be made clear,” he says.
“They just want someone to give them the same opportunity that other people have gotten who have credit and who have access to funds,” McMinn says. “They don’t want a handout – they just want a seat at a table.”