How microfinance is changing the world
How small loans are dignifying, empowering and changing lives across the world—and redefining how we perceive the poor among us.
I was 5 or 6 years old when I first heard it: "Jesus tells us, the poor will always be with us." I was in Sunday school, and my teacher went on to describe what it meant to be poor; she read us stories about people who were starving and needed food, or thirsty and needed water, or without a home and needed a place to stay. She went on to say how there were always people around us who were in need, and that we, as Christians, were called to help the poor by giving them the things they needed. This made God happy. In fact, she continued, helping someone who was in need was like helping God.
On one hand, these ideas were terrifying to me—not because of realization that some people lived in poverty, but because it made me think (remember, I was six years old) of how I felt when my little brother would follow me around endlessly, or ask me over and over and over again to borrow a toy, or repeat every word I said just to annoy me. "The poor," whoever these people were, apparently wanted something from me, and they weren't going away. Ever.
On the other hand, hearing these things challenged and excited me. I got to be someone who could help! I felt important. On top of this, I was important enough to help God. I could help God! I began to imagine—and long for—someone who was poor showing up and knocking on the front door of my house, in our neighborhood in the suburbs, and ask for food or water or clothing. I had food and water and clothing in my house, and I would give it to them! I would know it wasn't just a poor person I was helping, but that it was God in there too, and I was helping God! I was so ready. I wanted to meet these poor people and get started.
But, no one came to my front door asking for these things. People came for other reasons. Some people came to deliver the newspaper, or sell Girl Scout Cookies. Some came to ask my parents to sign petitions or vote in an upcoming election. People came Christmas caroling. People came for many different things, but no poor people came like I'd imagined they would. I began to lose interest. Soon, I stopped looking for them. And after a while, I even stopped hoping they'd come.
Fifteen years later, as a young woman, I'd been exposed to thousands of images of "the poor" over the years. I still hadn't had a significant experience interacting with anyone who was poor. But, I began to have other ideas and other feelings about who they were. Mainly, I learned about the poor through stories and pictures.
First, there were news stories. These were almost always about huge groups of poor people, living very far away. Often these groups had been hit by some disaster or were in the middle of a war. The stories were negative, frightening and desperate. There were pictures of children with swollen bellies, with flies on their eyes and lips. There were pictures of adults staring at the camera hopeless and devastated. By the time their story was in the newspaper or on TV, most of the people were already dead or dying. How could I help them then? There was nothing to do but feel sad and angry.
There were also sad and panicky stories I read on pamphlets or letters from nonprofit organizations asking for money. They were tales of people who were so hungry, or so sick, or so afraid, that it was almost too late—unless I could send my money right now! Sometimes I did send money, though I never had very much to send, and it was easy to feel inadequate. When I didn't give at all, I felt guilty. And I certainly never had that connection I'd expected to feel, that ultimate connection, from the truth that being able to help someone else was like helping God.
Over time, my guilt began to turn into shame. There were so many poor people out there. I didn't know how to find them, and certainly didn't know how to alleviate all of their suffering. Part of me stopped really hearing the stories, stopped really seeing the pictures. I couldn't keep feeling so ashamed, or so helpless.
Fast-forward even more. By then, I had just graduated from college, and my curiosity and desire to help the poor were still there, but had morphed a bit. I no longer spoke out loud about a desire to meet poor people and help them. Instead of speaking about people, now I spoke about poverty. I talked about how I wanted to work in international development, in the nonprofit sector.
Bridging the disconnect
However, I wasn't sure how I fit, where I should go to help, or what I could contribute when I got there. Sometimes, I wondered if my path was completely arbitrary. It was all I could do not to close my eyes, spin a globe, put my finger on a random country and just decide to go there.
So, I began digging, searching, reading, reflecting, journaling—just trying to figure out what in the world I could do to make an impact on poverty. I kept files of "dream jobs" and "social entrepreneurs" and "international development courses/programs" and the like. I'd have at least three to four lunches or coffee dates a week with anyone who knew anything about poverty.
I also sat in on lectures and conferences at Stanford University, where I was working at the time. One evening, I stuck around after work to hear yet another speaker on campus. He was talking about something related to banking, which I knew nothing about, but apparently he worked with very poor entrepreneurs. It sounded like it could be up my alley, so I went.
The speaker that evening was Dr. Muhammad Yunus. It was three years before he would win the Nobel Peace Prize for his pioneering work in microfinance.
Hearing his story changed my life. Something clicked. He talked about teaching economics in Chittagong University in his home country of Bangladesh. He felt a disconnect with the people—the poor—that were the focus of so many of the economic theories he taught, so he decided to go to them directly. He told how he sat down with poor basket weavers in a nearby village and listened to these women's stories. He asked these women why they were poor, when they worked so hard everyday. He told us how these women were very smart, and very aware of what was happening. As he heard their answers, he learned that all of the women were trapped in a cycle of borrowing money from money lenders at very high interest rates—rates so high they kept the women from ever making a real profit from their hard work each day. He talked about reaching into his pocket and lending them some of his own money, at a low interest rate. And he spoke humbly of how the women all repaid their loans, improved their lives, and from there, Dr. Yunus started his Grameen Bank, and the rest is microfinance history.
I was instantly reminded of the desire I'd felt so long ago, so clearly: the desire to meet someone face-to-face who was poor, to hear about their needs, and to be able to fill that need. Maybe it was really that simple. Maybe I'd always been ready, always been qualified to do this.
I was also suddenly filled with a hope that maybe I'd been wrong about the poor, at least in how I'd imagined them from the news stories and other nonprofit images I'd absorbed over the years. The people Dr. Yunus described weren't at war, or weak, or on the verge of death; instead, he had described strong, hard-working, intelligent individuals. And they didn't even need something given to them—they just needed to borrow a few dollars! I certainly didn't feel afraid or sad when I heard their stories. I felt admiration, and optimism, and respect.
A few months later, I quit my job at Stanford and flew to Nairobi to work with Village Enterprise Fund, a nonprofit that gave people $100 to start small businesses. I spent the next three months in Kenya, Uganda, and Tanzania going from village to village, interviewing entrepreneurs who had received this grant. It was a chance to talk face-to-face with more than 120 rural entrepreneurs, and to learn how $100 had affected their lives. It was also a chance for me to ask them what was next: What else did they need? What were their dreams for their lives? Could I do anything to help?
I felt deeply moved by the success stories I heard over and over again—stories like those Dr. Yunus told months before. It was true! These were intriguing, strong entrepreneurs. They were empowered and intelligent and capable. They were doing simply amazing things with relatively small amounts of money. With $100, they were truly changing their own lives, and the lives of their family members, in a permanent and real way.
What did that change look like? It meant a new home made of bricks or concrete instead of mud. Or a mosquito net. Or healthier food. Or parents who could now proudly afford to pay school fees for their children. Or the pride that came with being able to afford sugar to put in tea.
Many entrepreneurs expressed a desire for a small loan, to build on these successes. Could I help? Could I find people to help lend money to them? I said I would try.
Breaking the debt cycle
A year later, we launched Kiva (www.kiva.org). In the beginning, Kiva was a very simple website with profiles of just seven entrepreneurs, all of whom I'd met in a small village in Uganda. Each entrepreneur's profile included their photo and a story about themselves, their business, and info about their loan request (all $200-$600 or so). The photos were not shots of people staring desperately into the camera, but instead smiling confidently, or doing some activity related to their business. One entrepreneur stood among the goats he raised. Another sat smiling in front of a small vegetable stand she ran. Another stood proudly before the field of maize she farmed.
Within 48 hours of posting the entrepreneurs' profiles and encouraging a few dozen friends and family over email to check out the website and chip in $25 each, all of the loan needs had been filled. The money—about $3,000 in total—was promptly sent along to our friend Moses, a pastor and trusted friend in Uganda, to administer the loans. He did, and over the following weeks and months, we all watched each entrepreneur's business grow and prosper. We read email updates from Moses, and cheered on everyone's incredible progress. We were delighted when Moses sent digital pictures of progress—a new goat; a vegetable stand being swarmed by eager customers on market day; a pile of maize just harvested. Within six months, the loans were repaid, and the money came back to our friends and family. They wanted to lend again.
So, after that first round of loans, we did a second, and a third, and dozens more. We got real organizations (instead of just our friend Moses!) to work with us, to administer the loans, collect repayments, and update lenders. In Kiva's first year, we loaned $500K. In our second year, Kiva's loans totaled $14 million. In year three, the total was near $50M. Today, Kiva connects hundreds of thousands of people—lenders and borrowers alike—across 150 countries, and $25 at a time. Often more than $100,000 flows through the site each day. In every way, Kiva's growth continues to accelerate, serving more people than I'd ever dreamed I'd see in my lifetime.
What matters more to me than the numbers? I care most about giving people the opportunity to help each other. I hope Kiva can connect lenders and borrowers in a way that is based on dignity and mutual respect—not pity, not guilt, not shame. I believe loans are an ideal tool to do this. I hope that Kiva will blur the traditional, hierarchical distinction between donor and recipient, or rich and poor, and instead build equal partnerships between human beings. I hope Kiva can give everyone on earth an opportunity to participate in someone else's story, and the chance to encounter God in each other.