Samoa: Website puts personal faces on microcredit loans
Updated
A new internet-based microcredit scheme is being hailed as an alternative source of funds for people in developing countries who need small business loans. The website kiva dot org allows individuals to make small interest free loans, typically 25 dollars, to people who want to expand their businesses and trade their way out of poverty.
Presenter: Bruce Hill
Speakers: Elrico Muņoz, General manager South Pacific Business Development Foundation,
MUNOZ: They come to us for help, for their very small businesses and then we do interview and assist them in write a very simple business plan and a loan proposal, and based on that we do a very small write up, just the one or two paragraphs and post it on our Kiva website and then the people from different parts of the world will see when they visit our Kiva web site and they will choose which business stories they want to fund. From there we will have a group of lenders which just have $25 each or even more. In just a matter of three days, this project gets funded from a group of lenders from different parts of the world.
HILL: What difference does it make having this kiva.org web site, putting individual lenders in touch with individual borrowers?
MUNOZ: It gives a very personal touch, unlike the traditional fundraising where the organisation will just submit a proposal with all the statistics and all the figures and the faces of the people that you are supposed to help are not there. They are just statistics. But with Kiva, each and every story is there with a picture of the lady with her life story and her hopes and aspirations. And then immediately you can see also at the bottom on the web site who are the individual lenders and you can even also what were their motivations why they help out this lady.
HILL: Does it make a difference the fact that you're getting these donations of $25 or $50 dollars from individuals, rather than from lending institutions?
MUNOZ: These are interest free loans. It also removes the bureaucratic red tape that we usually encounter when we do fundraising via the traditional way. You have to submit a proposal and deal with big institutions like aid institutions and you have to wait for a while and then sometimes you have to submit voluminous reports and other documents. All these things are removed. All you have to do is really just write the personal story.
HILL: Do you think that this kind of individual interest free micro-credit could be the way of the future for these sort of loans?
MUNOZ: This will be actually the alternative way of funding, especially for those very small micro-finance, institutions like SPBD in Samoa. Usually, we cannot have access to the big loans or even big grants from other funding institutions, because we are looked at as a very small institutions. And it's very costly also for some funding agencies actually to go to Samoa, because it's too far away.
HILL: And, how do the recipients of the money, the women who get the micro-loans feel about the fact that it's coming from individuals, and not from large institutions?
MUNOZ: They're very much excited with it, because the fact that we usually tell them that their pictures and story will be posted on our web site, and everybody around the world who has a computer can actually see their story and their pictures. And sometimes they even tell their relatives overseas, eh, I have my picture here and I have my story on the web site. They're very much excited. And the fact also that they know who are funding them is not nameless or faceless people. They can see who are really funding them. And in fact, there are some instances where in the borrower had some direct communication with some of the lenders. They started actually communicating with each other.
