“This partnership enables Kiva to bring our crowdfunded, risk-tolerant, patient capital to microlenders and social enterprises willing to try new evidence-based loan products that would otherwise be deemed too risky or unproven to try,” said Premal Shah, President and cofounder of Kiva. “Throughout the lifespan of the project we will test what works, experiment with scalability and replication, and share our results across the financial inclusion sector.”
“Kiva has demonstrated ingenuity in developing new ways to enable smallholder farmers and others living in rural and remote areas of Africa to access the working capital they need and want,” said Ann Miles, Director, Financial Inclusion and Youth Livelihoods at The MasterCard Foundation. “We’re proud to partner with Kiva and Kiva Labs to support innovation in this important sector, expand the range of possibilities and empower larger numbers of people to improve their livelihoods.”
Creative solutions and loan products are driving progress around the world, changing lives and lifting entire communities out of poverty. Yet millions of people still lack access to the capital they need and vast numbers of problem solvers can’t find capital to scale their own ideas. Standard microcredit products follow very rigid repayment schedules that do not match well with the irregular income streams of the poor, especially farmers. Multiple studies have demonstrated the limitations of standard microcredit models that leave millions without access to formal financial services.
Kiva has set out to change this picture through Kiva Labs, a set of experimental partners and loan products designed to encourage innovation in the microcredit and social enterprise sectors. Kiva Labs’ partners such as Juhudi Kilimo have developed successful models for financing under collateralized, productive, moveable assets like hybrid dairy cows that more traditional providers view as too high-risk. Nevertheless, these models can bring sustainable productivity gains and wealth creation for clients.
The MasterCard Foundation’s support allows Kiva Labs to:
Financial products and services under consideration to adopt or scale-up include flexible repayment schedules, providing market linkages to help clients maximize returns on capital, and financing undercapitalized “would be” innovators and social enterprises. For example, Kiva’s social enterprise partner Komaza helps farmers in drought prone eastern Kenya convert drylands for small-scale forestry that can generate sustainable income for the families’ next generation. The social enterprise equips the farmers with training, as well as with Kiva loans, to plant fast-growing trees on unused land. Komaza then buys the trees and links them to larger lumber markets to meet the demands of Kenya’s rapid growth.
Kiva is uniquely positioned to push the boundaries of microcredit, accelerate the development of new loan products and services, encourage replication, and gather and transfer knowledge across the sector.
At its core, Kiva.org creates an online marketplace. On one side of the marketplace are the two billion people worldwide who lack access to formal financial services and the diverse organizations who serve them. On the other side of the marketplace are individuals with an internet connection who lend as little as $25 to help crowdfund loans at 0% interest to help create economic opportunity around the world.
Kiva’s model provides several advantages for innovation and replication:
|Location||Central Africa, West Africa, Southern Africa, Eastern Africa|
|Value||USD 7.9 Million|