Kiva Stories from the Field

Does microlending work?  That’s one of the questions that I wanted to answer as a Kiva Fellow and that’s the question I’ve been asked on numerous occasions since I returned to Seattle.  After a couple of weeks of readjusting to the American pace of life, I’m prepared to provide an answer.

Yes, it works.  But, it works differently than I thought.

When I left for Ghana, I had my preconceptions about microfinance.  I was intrigued by how these loans could enable wealth creation for the working poor.   Through my market-oriented frame of reference, I was hoping to see how a loan was helping an entrepreneur expand their business from a small market space and beyond.  Perhaps, it is my American-bred fascination with innovation and aggressive growth, but I viewed the loans as an opportunity to invest in the next big idea in a small corner of the world.  What I found out after three months in the field is that wealth is being created, but it’s a different kind of wealth.

While there are stories of how microfinance borrowers have used their loans to significantly expand their business, the majority of the stories are much more human, more real and, in the end, more meaningful.  After interviewing more than one hundred borrowers and asking them how the loans have changed their lives, the most common answer was not about their business.  Instead, it was about how the loan allowed them to help pay for their children’s school fees, put more food on their table, and pay for health insurance.   Sure, the loans helped them increase their inventories, sales, and profits.  But, more than creating wealth these loans are providing a type of social insurance to these borrowers.  As a Kiva lender I am not simply financing a business, but financing a safety net.      

And, in the process of answering one question, I realized I had answered another question.  What does a profit-oriented social business look like?  It looks like the single Ghanaian mother whose thriving roadside cocoa yam stand enables her to keep her business running and keep her daughter in school.  A true double-bottom line.   And its all powered by loans from Kiva lenders.