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Disclaimer: I entered into a tentative agreement with the online wine retailer Wine Chateau under which they sponsor two of my posts per month. Wine Chateau has no influence on the topic I select for the post or its content. Opinions expressed are all mine.
This Sunday, some things are different. First of all, as I am sure you noticed, Wine Chateau has offered to sponsor two of my posts per month. I was going back and forth a bit on this one, but ultimately I liked that they were willing to give me some money for this without any influence on the content of my posts. Also, I had an idea on what to do with the money which I think could be a cool thing to do:
Some of you might know that I am an active lender on the micro lending platform Kiva.org. For those not familiar with Kiva or micro lending, just a few words: Micro lending emerged over the last decade as a form to assist entrepreneurs in developing countries by giving them access to small loans to help them improve their businesses. Muhammad Yunus, the man credited with “inventing” and expanding this movement, and his micro credit organization Grameen Bank received the Nobel Peace Prize for their work in 2006. Kiva was started in 2006 by two Americans and has since become the largest platform for people worldwide to engage in this field. It now also offers loans in the United States.
Micro finance institutions (MFI) that have been vetted by Kiva post loan profiles to its website and you can decide whom you want to support. The loan periods range from 4 months to over 36 months and there is a huge variety of activities you can support from brick manufacturers in Peru, to clowns in Indonesia to cattle farmers in Kenya, and and and. The minimum investment is $25, and other lenders from around the world chip in to fill the amount. The loan recipients repay the principal to their MFI which in turn wires the money to Kiva which then credits your account. While the MFI charges loan recipients interest, you pretty much give the MFI an interest free loan because you will only get the principal back.
Here is a video of how it works:
What drew me into this project in early 2007 is that for people with limited means (I was at the time in legal training and barely making any money), this is a great way to help because in all likelihood you can reuse the same money several times to help people. I have since made over 200 loans, the vast majority of which were repaid. There is a risk of losing your money if the lender cannot repay the debt or the MFI goes South, which has happened before. But in my six years on Kiva and with an average of $300 in the system, I have lent $5,500 to over 200 entrepreneurs in over 40 countries. Out of the $5,500 I only lost somewhere around $47. Which means the repayment rate on my loans has been an excellent 99.02%; on the whole site, the repayment rate has been 99.03%.
Kiva also lets you found and join lending teams in which people with similar interests or friends can pool their resources and join together funding loans. It is a nice community device.
Why am I telling you all this? As I told you, the activities of the people seeking money for their businesses are vast. And some of them are to people that are engaged in the wine trade, usually grape growers. So, this week I started a lending team for wine lovers to support entrepreneurs in developing countries in all aspects of the wine business: from grape growers to wine makers to wine sellers. And I will use the money I get from Wine Chateau to support loans through this group. I think it could be a fun exercise to try out…
So, if you are on Kiva already, why don’t you come and join my lending team “Wine Lovers Unite” here. If you are not yet on Kiva and want to give it a try, Kiva is giving you the first $25 to make a loan so you can check it out without any risk for you. The loan is repaid to Kiva, so you don’t actually get to keep the $25, but it’s still a good way to try it out. Please follow this link to get to the group and sign up for the free loan. I already made a loan to someone in Georgia (the country) who is a winemaker that wants to open a pub to diversify…feel free to join me!
A few notes: Lending on Kiva can be done from anywhere in the world. It is not without risk of losing the principal. Micro lending has received mixed feedback and results on its goal to help reduce poverty. Some hate it, some love it. As with all attempts to help, there are pros and cons. But I believe it is one way of helping, not the only way for sure, but it can be used as a tool for good and I believe Kiva has so far done a decent job. Find out more about Kiva on their website: www.kiva.org.