The Fruit of Our Loans: Students Give to Developing Nations

Kiva.org bridges the gap between lenders and entrepreneurs in developing countries. And students are jumping on board to help.

Steady droplets fall onto the treacherously uneven road as Mastula Ndagire travels from her one-room home in Kampala, Uganda to her vegetable stall in the nearby town of Kalerwe.  Around thirty people purchase vegetables from her before she returns home.

As a 48 year-old widower and mother of seven children, Ndagire continues to work hard to pay for the meals and schooling for her remaining four children living at home.  The modest living she makes from her small business is often not enough to cover her children's school fees, and she must ask her brother for help in paying the difference.  Times grow gradually more difficult as she must pay for medicine, transportation, and rent amongst an unstable economy.

In the midst of her hardship, Ndagire hopes to expand her business to make more money for her family.  An aspiration that would normally seem impossible is granted in the form of a $235 loan from the web-based organization Kiva.org.

Funded by contributions from volunteers, Kiva.org uses the strategy of microfinance to aid in the reduction of the world's poverty.  Microfinance is the supply of small amounts of money through loans, savings, and basic financial services to impoverished people.

Kiva uses this economic plan to promote businesses and entrepreneurs in poor areas by connecting them to lenders through a simple process.  First, lenders search for entrepreneurs on the website.  The lender then gives a minimum loan of $25 to the business, which the entrepreneur will pay back in a set time period.  When a lender is repaid, he or she can either reinvest in another company or withdraw his or her original contribution.

It all started in 2004 as a side project for founder Matt Flannery and his wife Jessica. Since its inception, Kiva has grown from a pilot project to an established online service with partnerships all over the globe.

"Kiva is a startup focused on connecting lenders with micro-businesses online," wrote Flannery in a blog entry.  "Kiva is all about connecting people."