Kiva: The cheapest way to help poor people

Image by malan.andre via Flickr

The short explanation (for those who have difficulty reading more than a paragraph):

What is it?

1. Basically, you lend someone in a poor country $25 so that they can use it as capital to grow their business.
2. In a few months you get all of your money back and the borrower has grown their business and are now better able to provide for their family and help revitalize their country’s economy.

It’s that simple.

Why do it?

1. It costs you nothing.
2. You change someone’s life for the better and contribute to the economy of some of the world’s poorest countries.
3. It is a lot of fun! Reading all the descriptions, finding your borrower and tracking your repayments is really enjoyable.
4. For every person who reads this and lends through Kiva (let me know by comments on Facebook, Twitter or preferably this blog) I will contribute $25 dollars myself (so you get to make me eat my words). If you are in UBC, join the UBC group first.

So come on, go to Kiva and just try it, I promise you that you will not be disappointed.

Now the long explanation (for those of you who want some in-depth explanation).

When it comes to aid of any kind, I am a very big skeptic. Too often have I witnessed well meaning money being squandered on useless development projects. My favorite dumb project is one that I learned about one night in Ghana when I was at a bar with some friends. We met some volunteers and after a while they started to describe their project. Basically, they had been sent from Britain to teach computer literacy to people in Ghana. However, they had been assigned to a village that had no electricity, so they had to charge the laptops with car batteries (this was before the days of one laptop per child which can be charged by batteries). The project was laughably unsustainable.

Not only are there dumb projects out there, but there are so many competing theories about development aid. Some say we should donate no-strings attached money, some say we should just leave the poor to develop on their own because it provides the right incentive. There is also the consideration (the one that stops me from giving most) of “where will my money be most effective?” I would like to maximize the impact of my (very limited) funds and doing so is very hard. I am currently reading different development economic works (currently on the End of Poverty by Jeffery Sachs) and will keep on reading until I have a thorough understanding of what I can actually do to maximize my ability to relieve my home continent of the poverty and despair that it faces.

Kiva sidesteps all of these considerations. Who cares if it is not the most efficient way to end poverty?  It costs me nothing. The money is not aid, it is simply a capital loan. I have the capacity to give unlimited funds and if I decide one day that micro-lending does more harm than good (unlikely) then I simply have to wait a few months and I will not have wasted any money as I will have it all back again. From all the famous developmental economists that I have read or listened to: Dambisa Moyo, Paul Collier, Jeffery Sachs and Stephen Lewis (many of whom as a group contradict each other on most points) none of them say that micro-finance is a bad idea. some argue as to how effective it can be, but none say that it has negative impacts. Until I figure things out I am going to continue to lend on Kiva… it is simply the safest way to go if you want to make a difference.

Finally, for anyone who made their Twitter profile pictures green in support of the Iranians (and do not currently contribute in any other way to those less privileged than themselves), this is one big step up into doing something that can make an actual measurable difference (still at no cost to yourself). Seeing as the action of making your profile green has shown a will to help others, not doing as little as lending money to someone who really needs it shows that you lack any real moral capacity to put that will into action and validates every single sarcastic remark that I and some others have made about the “People’s Twitter Front”.

As for who to loan to, I prefer to loan to Women in Africa, more specifically Women in Ghana. I also like loaning to groups as there is more security. But the nice thing about Kiva is that you have choice. Find someone who’s region/plight/plans strikes a chord in you and help them out. It becomes very personal.

So go ahead, make me, yourself and most importantly a desperately struggling businessperson happy by signing up to Kiva and giving just one loan. As I said above, let me know and I will loan $25 in response.

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• The Inevitable Anti-U.S. Backlash Has Started On Kiva (techcrunch.com)
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• Schneidman: Helping Africa Save Itself (one.org)
• International aid: Help or handout? (guardian.co.uk)