Posted by Tom Foremski - October 2, 2012
You don't have to be Bill Gates to make an extraordinary difference in the world, says Kiva President Premal Shah (above).
As president of Kiva, a non-profit micro-lender, Premal Shah helps connect low-income entrepreneurs with financing that he describes as "micro-finance meets Match.com."
Shah recently wrote that "if each of us lent as little as $25 to be a part of 'crowdfunding' a loan to a small business owner, the funding gap that stunts job growth and economic recovery would begin to be filled."
The small loans that Kiva facilitates are made though such services as PayPal to micro-finance institutions that administer the loans. Since 2005, the non-profit has provided $351 million in loans from more than 830,000 lenders and claims a 98 percent repayment rate.
Shah first dabbled with Internet micro-finance when he was at PayPal and at one point took a leave from the company to develop and test the concept in his homeland of India. Upon his return to Silicon Valley, he helped start Kiva.
Since then he has been named a Young Global Leader by the World Economic Forum and one of Fortune magazine's "Top 40 under 40."
Shah recently shared his thoughts about technology in general and how mobile technology in particular plays a pivotal role in achieving success for fledgling entrepreneurs.
What's the driving force behind Kiva?
Our mission is to connect people through lending to alleviate poverty. What draws people to it is the fact that we know that there's not enough donations in the planet to really solve some of the biggest problems of our time.
We know that commercial investment in the market is not going to solve things on its own and that governments aren't going to solve it on their own and that there's a role for each one of us in $25 chunks to actually make a difference -- not in terms of solving hunger, but, for this one specific person that you're connecting with in Cambodia or in Honduras or in Kenya and participating with them to grow their business or maybe going to college.
How does technology factor in for entrepreneurs whose trades may be low-tech or no-tech?
One thing that we see is that technology is just a means to an end. The real innovation is on the ground with people, with real business ideas, whether it's someone in Pakistan who wants to buy a rickshaw, someone in Cambodia who wants to buy a hand loom for a silk weaving business, someone in Kenya who'd like to buy three cows. While that might not seem innovative to us, that's not necessarily the point.
What's really cool about technology is not the technology itself, but, the ability for you to actually see the impact that you can make.
And not just you. Two seconds later someone in Des Moines, Iowa just chipped in $25 and four seconds later someone in London and someone in Tokyo and then someone in Istanbul, and it's amazing that you realize you're part of this global community that wants to do good.
So even people of modest means can be philanthropists and financiers?
You don't have to be Bill Gates to make a difference. You can just be an average person to make an extraordinary impact on the world. My hope is that one day someone funding on the Kiva website will help, say, an entrepreneur in Cambodia become the next Mark Zuckerberg or the next Bill Gates.
What's so powerful about crowdfunding platforms like Kiva is if a bank says "no" the Internet community can say "yes." You, as a small business, can bring your case to the Internet community, and in $25 chunks raise money from complete strangers or friends or family.
There's a quote, "The future is here now. It's just not evenly distributed yet." And when I think about the future it's not necessarily what's coming out of Silicon Valley, but it's what's happening in Nairobi, Kenya.
You've attributed much of Kiva's success to mobile technology.
In the last 5 years mobile phones have tripled in terms of penetration and now about 80 percent of the developing world is on mobile networks. I just heard a stat that in India there are now more mobile phones than toilets.
So, clearly, for people who are born in completely rural places, who don't have access to safe, clean drinking water, to energy, to safe and reliable financial services, to all sorts of services that we might take for granted here in the developed world, the mobile phone is an impressive opportunity for access to information and opportunity.
With a mobile phone you can be sitting inside a hut in rural Kenya and within seconds get money from San Francisco and it's revolutionary what it means in terms of cost of access to capital and in terms of convenience and security for that woman in the hut to actually get money digitally instead of in cash.
[Through digital transactions] people in rural areas are able to save money in a safe place. Often times when a woman in the household gets money, one of the chief issues is who has control.
There's a great quote from a woman in Kenya who said, "My husband may try to break into my phone to get my SIM card, but he'll never be able to get my money off my phone because people can now save safely and there's a convenience there too."
From a broader perspective, I think some of the biggest trends that we'll see [in developing countries] are in two spaces. The first is mobile phones and mobile finance, and the second is in crowdfunding. They want to buy a rickshaw, they would like to buy a cow and start earning an income in this way.
You can start a small business no matter where you live. Cambodia, Kenya and even here in the United States.
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