Kiva Announces Microloans for Education
Kiva, the website that connects microlenders with microborrowers, is branching into new territory: Today, it announced the beginning of a pilot program to give microloans to worthy students in Bolivia, Lebanon, and Paraguay. Donors can give as little as $25 to help students in those countries pay their tuition and complete degree and certificate programs at local institutions. In a press release, Kiva President Premal Shah said the following about the new program, which, after this year, Kiva is planning to expand to 15 countries:
We believe the Internet community is in a unique position to share the risk of student lending in the developing world and if these students repay their loans -- as we believe they will -- it could be the very impetus needed to make education accessible for everyone around the world.
Shah also spoke with Fast Company about the expansion, comparing it to Amazon's adding music to its inventory, after initially just being an online bookstore. It's a logical next step, he says:
What’s happening is there is a risk tolerance because empathy creates generosity and there’s a risk distribution on the website. Hundreds of thousands of people are sharing the risk—spreading across countries and people--there’s a higher risk appetite to try these new risky loan products in the developing world. If you can prove that the repayment rate is high over the next 1 to 2 years, it has a huge demonstration effect for more traditional providers of finance.
Shah also noted that education can lead to as high as a 300 percent increase in income level, evidence that these loans are likely a sound investment, as well as an act of kindness.
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