I made my first Kiva loan over the weekend. Kiva is a Web-based facilitator of microloans, a system where multiple people loan small amounts of money to loan applicants in impoverished or developing nations as a "startup boost" to economic independence. This allows, as an example, 50 people in the first world to loan $25 each to an African village or a Cambodian fisherman, which allows the recipients to buy a generator or a shop that in turn leads to an increase in financial standing that would otherwise be impossible. The recipients then use the increase in income to pay back the loan on a scheduled term (just like a standard car or mortgage payment), which allows the lenders to then re-loan the money to other recipients.

The concept is similar to other "distributed" systems (such as distributed computing projects like Folding@home or BitTorrent); rather than a single source making one large expenditure (whether a financial loan or a large computer file), distributed networks allow many participants to contribute small pieces of the whole. While I may not be able to loan someone $2,000, I can be one of many people to loan $25, and while $25 is fairly insignificant to me, it can make a world of difference to someone whose yearly income is equal to a few thousand dollars. The concept of microcredit earned its originators the Nobel Peace Prize in 2006.

Labels: activism, social commentary