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Micro-Loans Offer Big Help To Entrepreneurs

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Hezron Maina is a pastor in Africa. He’s also a businessman — one who had a problem. His tiny grain store needed inventory, and his crops were in trouble. What he really needed was a business loan, and for that he needed a miracle.

A hardworking bicycle taxi driver had a similar dilemma, as did a widow with a family to feed. But these people have more than just problems in common. They also share a solution to those problems, thanks to people like Andy Ticcione of Minneapolis, who were willing to put their faith and money in the hands of these hardworking but needy strangers.

Ticcione, a graduate student in Minneapolis, saw Hezron’s photo on Kiva.org, the Web site of an organization that pair people who are willing to risk loaning small amounts of money — as little as $25 — with would-be entrepreneurs trying to make a living in 37 of the poorest countries on Earth.

Andy’s response at seeing Hezron’s photo — a simple image of a man on his farm — was to help.
“If I can give him a hundred dollars that was a gift to me for my birthday, I’m gonna help him out,” Andy said of his reaction.

The site was founded by Jessica and Matt Flannery. They were newlyweds — he a software engineer, she an MBA student at Stanford — who were convinced they could use the Internet to put people in need together with people willing to help.

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“When you see somebody who has succeeded even a little bit and you just know they’ll succeed more if they have another opportunity, you just — you want to be a part of that,” Jessica said.

“I think it's something very comforting, very human, and almost irresistible when you know that this person in this picture is going to benefit from my little action on the Internet today,” Matt said. “That's an — an irresistible offer."

The Flannerys ignored critics who predicted no one would loan money to poor borrowers who had no collateral, like a war refugee and her children making rugs in Afghanistan, or a young Nairobi mother selling corn in a slum.

But people were willing to loan them money — just a few lenders at first, and then thousands.

Into the hands of people who need it

“I just thought that it was like, a really simple organization, you could see the money going into the hands of real people who needed it,” Matt said.

It takes about 30 seconds to set up an account on Kiva.org to start making loans to people like Juma Motatiro, a bicycle taxi driver in Kenya who needed an $800 loan to help his wife set up a restaurant.

I sent Juma $25, and he started paying me back right on schedule. But I always wondered where they money really went, and how Juma and his wife were doing. So we went to Africa to check on Juma and two other Kiva borrowers to see for ourselves whether Kiva really works.

It was a long trip to Nakuru, Kenya, a gritty city of 300,000. We had asked for Juma to meet us. All we had was his Kiva photo, but we recognized him right away.

Juma spoke little English, but with the help of an interpreter, he agreed to take us around town and tell us his story.

Juma started out a few years as a security guard, and then he started renting a bicycle taxi. He saved enough money after a year to buy his own bicycle and he's been a bicycle taxi ever since. But competition is tough and in spite of working 16 hours a day, he could barely support his wife and six children. But then a passenger told him about Kiva and everything changed.
Juma used the money to help his wife Nancy set up a little restaurant, and right away, business was booming. The line for Nancy's rice and beans, flatbread and tea was out the door.

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It is still a tough life, and they improvise a lot — a plastic bag for a cash register, an upside down pot for a grill, and a soda bottle for a rolling pin.

There's also no plumbing, so Juma carries water and other supplies on his bicycle. Or on his back. But at the end of the day, they have enough to break even — and then some — for the first time in their lives. On this particular day, it’s 700 Kenya shillings, or about $14.

The added income has put a new roof over their heads. They used to live in a one-room mud shack in a rough part of town. And while their new home isn’t fancy, it is made of concrete and has electricity and a metal door, which means security for the family.

James Maina is director of the Ebony Foundation, a non-profit group focused on fighting poverty, and Kiva’s local partner in Kenya. He says there is virtually no other institution in the world that would loan someone like Juma money.

“I don't know of any institution that would give him money based on the business he's doing,” Maina said.

“And even Ebony itself, was it not for Kiva, I'm not very sure whether we would have done that,” he continued.

Compassion turned into micro loans

Economists call what Kiva does “micro loans.” Jessica Flannery just calls it compassion.
“You start to realize…this is their shot. This is their chance to go from below to above the poverty line for themselves and their families,” she said. “I mean it's not life or death, but it's kind of close.”

That might be why Kiva is growing exponentially. A year ago, they did a $1 million in loans. This year, $15 million, and more than 155,000 lenders.

Kiva is rewriting the book on helping the poor — people like Naiyare Nongepa, a 50-year-old widowed Masai tribeswoman in Southwest Kenya who needed a $1,000 loan and got it from 25 lenders across the globe.

Naiyare supports a family of five, and lives in a hut made of dung. She plans to use the loan to buy cattle and finish building a new home.

Naiyare is the leader of five Masai women who all applied for Kiva loans. Some will purchase cattle, but all will buy more brightly-colored beads to make the Masai's highly prized jewelry which they sell to tourists.

A third Kiva borrower, Hezron Maina, the pastor and seed merchant in the small village of Subukia, also received $1,000 from 25 different people.

Before the loan, Hezron lost opportunties through the limited supply he was able to offer. Customers often went away empty handed. That changed when he took a few hundred dollars and used it to buy inventory for his seed store. But with the rest of the Kiva money, he had much bigger plans.

He also leased three additional acres of farmland, adding to the five he already rented for growing corn. With more corn he generated more sales, and enough profit that for the first time in his life he can send his three children to a decent school.

“It helped me a lot because it raised my standard,” he said. Now I have no problems, such as before.”

Hezron also has had no problems making his monthly repayments. Like Juma and Naiyare, he's on schedule to have his loan paid off within two years.

Kiva says that's typical of the vast majority of its borrowers.

"It's really wonderful to be able to look at somebody across the world that you might have thought in a different way about, and look at them as your equal, as your partner, and as somebody that has really kind of impressed you and has blown you away with what they can do with this little bit of money," Jessica Flannery said.

It's a simple but powerful concept — small acts of faith that have changed the lives of thousands of people who aren't looking for a handout — just a hand.