Wednesday, November 01, 2006

Uganda: PBS Frontline/World feature on microfinance programs in Africa

For my readers who found the story about this year’s Nobel Peace Prize winners Dr. Muhammed Yunus and the Grameen Bank interesting, Ethan Zuckerman of Global Voices Online highlights news about a PBS Frontline/World documentary on microfinance and micro-lending to the world’s poor. Microfinance is a great way for individuals to get involved with supporting poor people who want and can provide for themselves and their families through micro-business and small business entrepreneurship vs. receiving aid handouts from donor nations in “the international community”. The PBS documentary focuses on a small California, U.S.A. firm which allows small capital lenders to “follow the money they lend” and measure results by having a hands-on involvement with the people and businesses they support.

Uganda: A Little Goes a Long Way produced by David Ritsher and Josiah Hooper and reported by Public Radio International’s technology correspondent Clark Boyd travels to Uganda to focus on the work a small San Francisco microfinance startup named Kiva Microfinance is doing on the ground to help alleviate poverty in this small east African nation.

What is unique about Kiva.org (Swahili word for “agreement” or “unity”) is that they use the Internet as a tool to help bring together peer-to-peer lenders and small business borrowers in developing nations. Their micro-loan programs have been hugely successful in helping small entrepreneurs get a start in owning and operating their own businesses and the loan payback rate is an astounding 100% to date. Public Radio International, WorldChanging blog, and the World Bank Group’s PSD blog have all done stories about Kiva Microfinance and I have provided links to their podcast and posts and to other microfinance resources below. The video should be available online at PBS Frontline/World for viewing by November 7, 2006.



Excerpt from PBS Frontline/World - Uganda: A Little Goes a Long Way

Microcredit is not new. It's been around in one form or another for hundreds of years. But in the Information Age, a San Francisco company has taken the idea of microfinance and upgraded it for the Web. Radio reporter Clark Boyd first reported about Kiva.org for Public Radio International's news program The World. He now travels to Uganda for FRONTLINE/World, where the first recipients of money collected through Kiva's Web site are building and expanding businesses.

Kiva, which means "agreement" or "unity" in Swahili, would allow people with a little bit of extra cash to use their credit card or the online money transfer company, PayPal, to lend directly to African entrepreneurs. Kiva got its start a little more than a year ago in Uganda, where it forged partnerships with local microfinance institutes so that each business would be vetted and approved before being posted on the site.

Boyd travels to Uganda to find out more about the real-world impact of these micro loans, He arranges to meet Grace Ayaa, whose peanut butter business received a micro loan through Kiva. When she fled a brutal war between government and rebel forces in the north, she took refuge in the capital. She takes Boyd to the Acholi Quarter, a poor neighborhood on the outskirts of Kampala, where many people displaced by Uganda's decades-long conflict scrape together a living.

Most people living here work all day in the local rock quarry breaking rocks used to build houses. The pay is around $1 a day. Ayaa helps people in the quarter out of the quarry work and into a position where they can start viable businesses with the help of a loan. Traditionally, micro credit is offered through banks that charge as much as 35 percent interest or moneylenders who charge as much as 300 percent. Kiva provides loans from individuals at a fraction of the cost.

Back in San Francisco, we see the other side of the operation, meeting some of the people who found Kiva's site and decided to make a loan. Nathan Folkert is a software engineer who lives in the city's Mission District. He read Grace Ayaa's story online and decided to help fund her peanut butter business. Ayaa is one of 70 businesses Folkert has loaned money to. He pulls up Grace's journal page where a message is waiting for him. "Thanks so much Nathan," Grace has written. "I purchased the fridge and bought the packing materials, and this has really enabled me to produce more."

Other lenders in the United States talk about their experiences. "My husband's hobby is rebuilding old motorcycles," says Donna Slote, who loaned to a small motorcycle workshop she saw on the site. "It's incredibly personal in the sense that you get to choose the specific businesses that you want to loan to. You have a real connection with where your money's going and what it's being used for," adds Slote.

Kiva has been connecting lenders with would-be entrepreneurs for a year now, but it is a small operation, relying on donations and a staff of seven in San Francisco to keep things running. Premal Shah, who used to work for PayPal, is Kiva's president, and he explains the role Kiva is trying to carve out in the microfinance world.

"Banks don't value emotional returns," says Shah, "so they will charge a high interest rate to these microfinance institutions. But people are a little more forgiving. Today, your average person can't actually invest in small businesses in the developing world." By creating Kiva, Shah says, "we're tapping into this new source of capital," which is ordinary people.

As Boyd travels across Uganda, meeting people and listening to their stories, he finds that many struggle to support much more than just themselves. In the town of Mbale, Amos Mayoka, a furniture maker, is hoping to get a loan of around $1,000 to expand two businesses he has started. "My elder brothers passed away of AIDS and left me with a lot of children. So now it's entirely on me to keep up the two families," Mayoka tells Boyd. When asked how many people he supports, Mayoka responds, "More than 20." Amos' picture and story are uploaded to the Kiva site, and his loan officer Janet will monitor the progress of his request.

Grace Ayaa also looks after more than her own family. She is the assistant director of Life in Africa, another of Kiva's local partners in Uganda.At the weekly meeting of her Life in Africa group, three loan requests are up for review. It's a lively affair in an outdoor garden setting. People fire off questions to the new applicants, who must give a good account of why they should be chosen. Those present are invested in making the right decisions, as they are all responsible if the business should fail. One of the hopefuls, Molly, has her loan officer explain that she needs $275 to set up a stall selling charcoal for fuel. One woman calls out that she supports Molly's loan but that she should not hire her son. "He refused to go to school 10 years ago," she says. "He might be capable of stealing or disrupting the business." It's a close community, and people know much about each other's lives. Molly's loan is approved, and soon enough it's uploaded to Kiva's Web site halfway across the world.
(Read more…)

Related articles and additional online resources:

PBS Frontline/World – Stories from a Small Planet
Uganda: A Little Goes A Long Way – 10/31/06

Kiva.org – Loans that change lives

World Bank PSD blog – Kiva.org P2P microfinance (10/31/05)

World Changing blog –
Distributed, Collaborative… Microfinance (10/21/05)

Public Radio International –
The World programMicrofinance report (02/15/06)
Interview with
Global Giving and Kiva founders and Ethan Zuckerman of GVO

My Heart’s in Accra blog –
Ugandan microfinance on PBS (10/31/06)

PBS and KBUY-TV –
Small Fortunes: Microcredit and the Future of Poverty

The Microfinance Gateway – online portal for the microfinance industry

Global Giving Foundation – enables charitable donors to give directly to projects

Accion International – a leading, award-winning U.S.-based microfinance institution

Unitus – a leading, award-winning U.S.-based microfinance institution

PBS microfinance documentary highlights Unitus and Accion (10/27/05)

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5 comments:

Anonymous said...

Hi Bill,

Thanks for your post on Kiva. We are completely humbled by the response that the Frontline documentary has generated. You've given your readers a unique chance to get connected with something worthwhile, in a relevant and practical way. Despite our servers being a little busy, encourage your readers to keep trying; we have over 300 businesses that are ready to be partnered with! Thanks for caring!

Regards,

Tim (volunteer with Kiva.org)
tim@kivavolunteers.org

Black River Eagle said...

Dear Tim,

You are very welcome. Kiva sounds like a great way for ordinary people to get involved with assisting the world's poor in starting small businesses. I noticed yesterday that the Kiva.org webserver was choking a bit and suspected that you were having a peak overload problem; hope that it has been fixed in the meantime.

Question: Does the Kiva online microloan service allow interested people outside of the U.S.A. to provide small loans to deserving entrepreneurs in developing countries? Do you guys accept currencies i.e. Euros and British Pounds Sterling and Japanese Yen for example?

Anonymous said...

This is Premal, Kiva's President.

The answer to Black River Eagle is: 'Yes'

People in 55 countries, including the regions you mention below can make a loan on Kiva via PayPal. PayPal supports multiple currencies, including the ones you mention below.

c Kirabo said...

I'm so happy to find your blog. Thanks for bringing attention to the show and the issues it raises.

All the best,

Christina Jordan
http://lifeinafrica.com
Life in Africa, Uganda

Black River Eagle said...

You are very welcome, Christina. That is an interesting project you have there in Uganda (Life in Africa). Good luck with your work in Kampala and Gulu and do stop by again for a visit.

Life in Africa - Uganda
http://lifeinafrica.com

Life in Africa is a community based, community owned social enterprise in Uganda, with member-run Webbed Empowerment Centers in Kampala and Gulu.
Over 85% of our members are people displaced or otherwise directly affected by Northern Uganda's 20 year long war. Together we are joining hands to lift ourselves out of poverty once and for all, and to make an impact for peace in our war-torn community.

We produce and export crafts to make a difference in the world, and promote social action initiatives online. Our unique Webbed Empowerment approach offers global communities of supporters unique ways to connect with our Ugandan community's successes and needs directly.

Life in Africa's WE Centers also offer internet training, a community microfinance program, and adult learning opportunities that are available to active members.