Kiva celebrates five years of making microcredit loans

Kiva is now celebrating its five year anniversary. The new generation of charity website launched as a way to get more people involved in microcredit. Anyone can contribute as little as 25 dollars to help make more micro-loans to people in the under-developed world.

Kiva now makes over a million dollars of loans every five days. Since its launch, 500,000 different borrowers have received over 123 million dollars.

From the San Francisco Chronicle, writer Robert Selna tells us where Kiva stands after five years in operation.

Micro-asset financing is a relatively recent innovation in micro-finance - which is best known for small loans issued to people trying to escape poverty by starting a business - and is an example of how the field has explored different loan models.

Kiva, celebrating its fifth anniversary on Wednesday, took that experimentation to a new level in 2005 when it coupled the Internet and large numbers of individual lenders with needy borrowers.

Using a Web portal, Kiva facilitates loans from individuals who can log onto its site and read borrowers' stories. Kiva partners with lending organizations in developing countries, which take the no-interest loans from Kiva and distribute them locally.

Kiva lenders are paid back if the borrower succeeds, but do not earn interest. Interest charged by the local lender typically goes toward operating costs and salaries.

In recent years, with the help of Kiva, micro-finance as an anti-poverty tool has quickly grown in popularity. But it also has developed critics. Some note that at least half the field is now occupied by private banks, which in the best case are seeking profits along with positive social impacts, and in the worst, are simply looking to make a buck off the poor - even from minute loans.

Others have complained that Kiva overstated the connection between its online lenders and needy borrowers.

Kiva and others in the micro-finance field agree that there have been bumps along the road. But they point to the growing number of websites modeled on Kiva as well as new programs - such as the asset financing helping Ndung'u in Kenya - as proof that the industry is evolving and is likely to continue influencing economic development worldwide.

Ananya Roy, a professor at UC Berkeley, has written a book about micro-finance and has focused in part on Bangladesh. She said many lending organizations in that country are not encumbered by relying on government funding and therefore are free to experiment - applying new and old finance techniques in an effort to alleviate poverty.

We just love Kiva and we do help to make some loans through it. Some of the money raised via the ads on our site goes into our Kiva account. This would be a good time to plug our group on Kiva, that we invite fans of the blog a apart of, go to this page to join