Microfinance pioneer shares wisdom with Rice

By Ly Hoang     4/16/09 7:00pm

Jessica Jackley, co-founder of Kiva, the world's first person-to-person micro-lending Web site, spoke at the Shell Auditorium April 14. Jackley was invited by Rebecca Richards-Kortum, Beyond Traditional Borders Director, as part of the Rice 360 initiative. Kiva, which means "agreement" or "unity" in Swahili, has helped nearly 500,000 lenders across the globe loan approximately $67 million to individual entrepreneurs from 45 developing countries since its founding three and a half years ago, the organization's Web site said.

In addition to alleviating poverty by providing loans to entrepreneurs, Jackley said Kiva strives to help establish a personal connection between individuals with different backgrounds. She said the Web site is based off of social networking sites where lenders can read profiles and descriptions and see pictures of the people seeking loans.

"Kiva's mission is to have people look at each other equally and with dignity and mutual respect, not with pity," Jackley said.

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Kiva lenders must loan a minimum of $25. This loan is then sent to a microfinance institution that works locally in the countries. There are over 10,000 MFIs in 45 countries. The MFI distributes the money to the specific individual at a small interest rate. As entrepreneurs repay their loans, the interest is paid to the MFI for operating costs, and the principal is given directly back to the lender. In effect, Kiva charges no interest and does not gain any monetary benefit from the transactions.

Kiva's operating costs are covered through various means, including donations and grants. Special campaigns with corporations such as Paypal, which waives all fees for Kiva, helps to reduce operating costs, Jackley said. Any principal that is repaid but not reclaimed by the lender is also invested to help with costs.

Jackley said she has been interested in alleviating poverty since she was young. She said her first impressions of poverty and the people it affected were heavily influenced by the image of suffering people who were dependent on the generosity of the wealthier nations. She said a feeling of guilt prompted her to volunteer in Haiti to work at an orphanage painting walls and playing with the children.

"I wanted to figure [poverty] out," Jackley said. "I interacted with kids my age who were working very hard to feed themselves. ... Poverty now had a name and a face."

Jackley said her experience in Haiti influenced her study of philosophy and political science at Bucknell University.

"After Haiti, I wanted to know how to ask questions," she said.

During her graduate studies at Stanford University, Jackley, who is originally from Pennsylvania, said she had the life-changing opportunity to hear Nobel Peace Laureate Muhammad Yunus, a microfinance pioneer, speak. She said Dr. Yunus's speech deeply impacted her because he spoke of the people in poverty not as helpless sufferers but as strong, independent entrepreneurs. Jackley said Dr. Yunus's method of speaking directly to those he wanted to help resonated strongly with her.

"The way he started his work was by talking to people, listening to them and asking the right questions," Jackley said.

Jackley said this inspired her to stay in Tanzania for three months, during which time she spoke with local entrepreneurs who shared stories of how they were able to use the profits from their businesses to change their lives. In her speech, Jackley recounted stories of a family who saved for months in hopes of buying a lock for security, because they lived near the slums. Another woman saved her meager money in order to afford sugar for her tea so that she could feel proud of herself despite the fact that she lived in a mud hut.

During this stay, Jackley also witnessed the problems of these entrepreneurs. Besides the often steep interest rates of loan lenders, these entrepreneurs also had to deal with the uncertainty of their next loan, she said.

When she returned to the United States, Jackley said she decided to create a way to lend money to these entrepreneurs. Although she said she was initially met with negative feedback, due to the legal issues of loaning money in certain countries, Jackley decided to continue with her plans.

In March 2005, Jackley traveled to Uganda and spoke with several entrepreneurs about their circumstances. After taking their photos and stories, Jackley asked them how much money they would need to begin their own enterprises. As she e-mailed her family and friends their stories, the $3,000 that was needed was collected overnight. Within six months of making this no-interest loan, all the money was repaid, accompanied by anecdotes of the new goat that was bought or the children's school enrollment. This evolved into the Kiva Web site.

Jackley advised those with similar goals of creating an effective solution to global issues to "know your mission." This way, Jackley said you are able to focus on it and base decisions on it. Jackley said Kiva declined a lucrative offer from a large corporation since it would bypass the personal connection lenders had with lendees, which was the basis of Kiva's motto.

Jackley also suggested the audience "stay open" to ideas and collaborations. Because the administrators of Kiva are very open with their brand, many inspired members of the community expanded the idea to have a Kiva Facebook page, Kiva MySpace, Kivapedia, Kiva chatroom and even KivaTV. This not only helped Kiva to grow in visibility, but also to reach out to many more people.

President of Owl Microfinance Elena White said Kiva's mission to make a global impact spoke volumes to her.

"What [Jackley] emphasizes is that Kiva is about connecting people around the world," she said.

White said it was important for OMF to look at the patience Jackley has had with Kiva.org, watching it grow from a trickle of support to sometimes crashing due to too much traffic. White said that Jackley said Kiva.org has a surplus of lenders.

"That's an amazing thing for a non-profit to be able to claim," White said. "[It's always better] to have too much supply than too much demand.

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