Through one of reddit’s recent advert campaigns, I’ve come to discover Kiva, a non-profit project trying to alleviate poverty through micro-financing of entrepreneurs in (mostly) third world or developing nations. It’s quite an interesting attempt at this issue really. While Micro-financing (MFI) is not something novel anymore, the idea of utilizing the Internet to make it very easy for distributed people all over the world to provide credit for particular causes.
This is in fact I believe the most important part. While MFIs are quite a worthwhile way to provide credit to those falling between the cracks of the financial system, it must have been quite difficult for people with some spare money to contribute to it. Kiva is the necessary step which finally makes it easy to connect those with money, to those who will distribute it. That it adds a personal touch and a sense of connection of lender to borrower is just the icing to the cake.
The thing I like the most about Kiva is that this is not a charity. While there is a general charitable aspect of it – specifically in the sense that lenders do not receive interest on their loans and have a risk of losing some of their money – as a whole the concept is made so that people get a chance to receive funds for their purpose (whether entrepreneurship or personal) and then return it as a whole but on better terms.
Why is this noteworthy? For me, it’s quite important not to be a charity event as I consider charity to be the wrong way to go about solving poverty issues. I won’t get into a lot of details but in a few words it insults both charitor and beneficiary and it promotes a passive and victim mentality. Nothing really an Anarchist likes to promote. On the opposite side, the Kiva and MFIs at least push people to find a way to put the money to good use and then be able to repay it. If trains people to solve their problems with those of us who have it better giving the leg up.
And this is the most important part. Simply giving money to the poor in order to get them from one day to the next is just hiding the problem under the carpet. Helping the poor overcome their problems with their own solutions and empowering them to continue thinking this way is the important thing. And I believe Kiva is a small step in the right direction.
Of course, compared to what should happen to finally resolve the problem of poverty, MFI is a drop in the ocean. However in a world where those of us who want to help feel so helpless to do so, the idea of helping people learn to stand on their own two legs is something.
So initially I was quite furtive in my first loan. I only gave out 25$ to one person and waited to see what would happen. Well, today I am glad to say I got 1.2$ of those back from the first return. Once I have it all back, I’ll be able to use it then to refinance someone else or even the same person if needed. This, along with me recently proposing to some rich online person to join Kiva as well, gave me the incentive to put my hand a bit deeper in my pocket and also to spread the word. Hence, this post.
There’s also some other interesting thoughts about Kiva I’ve made. For example, one can also withdraw their money once its been returned. This means that one can theoretically use Kiva as a kind of savings account as well, in a sense hitting two birds with one stone. Both doing something about poverty and also having a small modicum of diversified security. Sure, it’s not getting interest and you may lose part of it, but it’s so spread out that it’s unlikely you’ll lose a lot and furthermore you can personally manage its risk to an extent and I am assuming it’s safe from bank runs. Just an idea anyway.
This post wouldn’t be complete without me mentioning what I think is the biggest criticism about Kiva: Interest rates.
You see, while Kiva does not charge any interest rates for giving the money, the partners who actually are in contact with the borrower and serve as the intermediary between Kiva and entrepreneur, do charge an interest, and this interest can go quite high. To the tune of 50% even! On average, at the time of writing, Kiva has an average interest rates from partners of 23% but this varies wildly. I’ve seen 1% as well.
While Kiva does a pretty good job of explaining why MFI interest rates are so high, one also needs to consider that the interest rate sharpness is relative. While in comparison to the developed world they are astronomical, compared to their local money lenders, the interest rates are downright free. Local money lender average is at around 86% and I’ve noticed a lot of areas where it’s over 100%! So I think if someone really needs a loan, an interest rate of 70% less than one would get through local channels is a much better help.
Of course this does not mean that all partners have it so high. One can easily discover those who have it as low as 4% or even 1% and since Kiva provides the capability to search by partner, one can easily just look and provide loans with the lowest interest rates possible. Of course, you shouldn’t expect to be able to find such partners on areas with high risk and poverty as that would simply be not sustainable. Personally I prefer to use the word search and look for “coop”. This way I usually find entrepreneurs who are having a cooperative as a partner, which at least tells me that the money I give out is not going to fund worker exploitation for profit.
I think Kiva is a very nice idea and certainly a step in the right direction. It’s not the most radical of concepts but every little bit counts. I also like the idea that as a movement, it can also combine the powers of both the left and the right spectrum of libertarianism. Both those of us who want to do out little bit to fight poverty without insulting those we help and those of us who want to spread entepreneurship values.
Oh, and as a bonus fact, Kiva also supports groups. This means that when you lend money, you can do it as part of a group of people. And would you know which people are the ones who have lent out more and by a large margin? Atheists 😉
I just noticed that today is the blog action day for Povertry and I felt the need to participate. Although the people for whom this blog day is about will probably never read it, I’m hoping this post to perhaps give insight and ideas for people who are, or might be struggling with povertry.
Povertry is unfortunately a major problem in the world still. Even with the rise of technology to such a great degree and the amazing enhancements food production has undertaken, millions of people are without the basic things of life. Food and Shelter.
I just noticed that today is the blog action day for Poverty and I felt the need to participate. Although the people for whom this blog day is about will probably never read it, I’m hoping this post to perhaps give insight and ideas for people who are, or might be struggling with poverty.
Poverty is unfortunately a major problem in the world still. Even with the rise of technology to such a great degree and the amazing enhancements food production has undertaken, millions of people are without the basic things of life. Food and Shelter.
This is, incidentally, the biggest failing of Capitalism. It is not that we do not have enough food to feed everyone in the world, it’s that we don’t know how to make a profit while doing so. How can you sell food to someone who does not have any money? Thus the invisible hand of the markets wipes itself of any responsibility and leaves the suffering to go unattended or alleviated through charities so that the companies can still make money.
In a our society, poverty is something expected and indeed I would argue, welcomed. You cannot have a perfect capitalist society just because poverty is something necessary. Not only does it force the impoverished people to do the worst jobs for the longest time within an unbreakable cycle, but as George Carlin famously said, it is the perfect tool to keep the middle class in line. What better way to be an obedient little worker, than to see everyday what awaits you if you dare to anger the powers that be?
I can’t really help the people who are impoverished, although I do have some ideas ((Which I’ve been consistently told will never work)) but what I can do is explain how all but the worst types of poverty need not be the end of life. The answer lies in what you need to live.
As a social human, most of us require three basic things to have a good life. Food, Shelter and Friendship. The rest is simply extravagance. When one has conditioned itself not to require anything other than these three to be happy it will take only the worst type of poverty to shake the foundations.
Food is generally cheap. Even if you cannot grow your own foo, one can easily find the food that is cheap and filling. When I was living with £100 per month for general & food expenses in London, I went on a diet of noodles and rice. While I not only learned to cook these simple things more interestingly, it also sustained me without ruining my organism as would eating junk-food have achieved.
Shelter is unfortunately at the moment quite expensive. Due to the concept of private property, land that could have very adequately sheltered people if put to use, now is just left unattended as the owner has no benefit in either using it, or letting others use it.
Fortunately, there are options available for the unfortunate ones. In a society who respects itself, there should be shelters for the poor. Not only are these necessary to protect the most unfortunate of us but they are a necessary stepping stone in making people a productive member of society again. It is amazingly difficult to find a job when you haven’t taken a bath for over month. Societies that do not have shelters for the homeless are especially criminal in this regard as they only keep this effect going.
Once someone has even a little money, options could include finding a cheaper place in a more remote area of the country (where the rent must be much cheaper) or along with a few others cohabitate, even if they may be a bit tight. At least that might help in the final necessity
Friends are (or should be) the final need of any human. Fortunately the good ones they are notoriously cheap to come by. Hell, all one needs is a bit of empathy and a non-toxic character and they come gratis. Not only do friends fill the basic social needs of all of us but good friends are the ones who will act as your own personal safety net when poverty is rearing its ugly head.
If one manages to be content with these three basic things, it will take the worst kind of abject poverty to put them down and even then, the way up is easier.