Creative Governance in Global Micro-lending

Creative governance need not have to depend on original ideas. It can improve on an existing successful model.

Muhammad Yunus from Bangladesh pioneered the concept of microfinance through his Grameen Bank. He won the Nobel Peace Prize for his work in 2006.

Matt and Jessica Flannery who heard Mohammed Yunus’s talk at their university were so inspired that they decided to do something. They started a community site called Kiva to match individual would-be lenders with poor entrepreneurs via the Internet. Lenders visit the Kiva website, read about the businesspeople asking for support, and then loan as little as $25 to anyone they choose. Like the Grameen Bank , Kiva helps people out of poverty but on an expanded global scale , leveraging on the enormous reach of the internet.

Kiva (the word is Swahili for "unity"), in San Francisco, deals with potential borrowers through its network non-governmental organizations who disburse it to the entrepreneurs. Those same NGOs screen the various applicants before their requests are posted on Kiva. They have the responsibility of identifying responsible entrepreneurs, disbursing the loan, collecting repayments and giving lenders periodic updates on how the business is going.

The money is eventually paid back to the NGOs, sent back to Kiva and returned to the lender. The lender can choose to withdraw the money or lend it to someone else.

The Kiva concept was given a tremendous boost when it was featured on the Oprah Winfrey Show, the Today Show, and readers of former US President Bill Clinton's book Giving. This created a unique situation in charity where there was a shortage of businesses in need of loans!

Kiva's founders say their success is due in part to strategic partnerships with corporations like Google, Yahoo, YouTube, Starbucks, and PayPal and also to the dedication of its staff and volunteers.. They help reduce Kiva's cost of operations and help direct Internet users to the Kiva website.

Details of Kiva can be found in www.kiva.org.

Comments

For every success like Kiva, there must be hundreds of others which died a natural death due to lack of resources. The founders of Kiva were fortunate in that their friend and neighbor, Premal Shah, who was then an executive at the on-line payment company PayPal decided to join them.

It’s time for governments to practice Creative Governance by setting up a mechanism of support and funding to increase the chances of people like the Flannerys to succeed in their altruistic ambitions.


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