Acton Institute Powerblog

Grassroots Microlending

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There’s a new venture, Kiva, that according to the founder Matthew Flannery is “a startup focused on connecting lenders with micro-businesses online. We provide the world’s first and only online micro-lending opportunity and just opened to the public 3 weeks ago. We have now started over 30 businesses in Uganda and are scaling at a rapid pace.”

The effort still looks to be in its infancy, but as of October 11 Kiva was officially out of “beta” testing. This means “we spent 6 months testing our software and our processes and we no longer consider this whole thing to be a ‘test’.”

Simply put, this is a great concept that can have real, concrete, positive effects in the lives of those living in the world’s poorest nations. Access to capital is a huge problem in many of these areas. Banks often cannot take on the risk of providing low-interest loans with terms long enough to spark development because of governmental, monetary, and economic instability in these countries. Now those of us who are concerned and live in the most prosperous nation in the history of the world can charitably take on that risk.

One of the great things about the microloan solution is that it attempts to find solutions that really work and address problems that arise in the real-world economic systems. These kinds of answers are an excellent alternative to economically misinformed campaigns like the “fair trade” movement.

Of course, not only for this particular venture but for all such efforts, effectiveness, transparency, and stewardship are key elements. Read more about Kiva’s due diligence process here.

The good news? “Due to the recent overwhelming interest in Kiva,” there are currently no businesses listed still looking for loans. The bad news? The need is great in the developing world, but it is difficult to bring these entrepreneurs to light. There is a lot of infrastructure work that needs to be done. Kiva is pursuing this in partnership with the Village Enterprise Fund.

HT: Seth Godin’s Blog

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty. He is also a postdoctoral researcher in theology and economics at the VU University Amsterdam as part of the "What Good Markets Are Good For" project. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary.

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