Kiva Launches Matching Fund For Refugees
It may not seem so now, but whether people would loan money to a stranger was a pretty big question when Kiva started in 2005. “It was the idea that maybe we can’t change the world, but if we could change the life of just one person it would matter,’” says Premal Shah, Kiva’s CEO and co-founder.
One billion dollars later, the answer is a resounding yes.
Kiva recently announced that more than 2.4 million entrepreneurs, farmers, students and others have used its crowdfunding platform to collectively borrow $1 billion. More than 2 million of those borrowers have been women, and 4,500 have been refugees.
Kiva’s aim was to open up lending to people banks and other funders consider too risky because they lack credit histories or collateral or have little or no income. As it turned out, people lending money on Kiva—$25 at a time—weren't taking much risk at all. Kiva’s loans have a 97% repayment rate.
While improving individual lives remains at the core of Kiva’s mission, its success is allowing it to look at ways to make a broader, systemic impact. Kiva recently opened its platform to social entrepreneurs addressing issues such as climate change or gender inequality. Now it is expanding its support of refugees with a new fund.
Kiva’s World Refugee Fund is a $250,000 matching fund, to be followed by a rotating fund of up to $9 million in loan capital, to assist refugees and host communities in countries including Lebanon, Jordan, and Turkey. Shah, who recently returned from a trip to Lebanon, where about 1 in 4 people are refugees, says the fund is a response to the size and duration of the crisis. The average displacement for refugees, he notes, is 26 years.“Beyond direct relief, there needs to be financial opportunities to help refugees assimilate and support themselves, and to lessen the impact they have on host communities,” says Shah.
Traditional lenders deem refugees high-risk because of their limited or inaccessible credit history, few fixed assets for collateral and higher flight risk. Kiva’s fund will raise money from corporations, foundations and the like that will be used to match funds from individuals using the platform. “Kiva’s lenders take on the risk that traditional lenders don’t, while allowing refugees to open a path to their futures,” says Shah. As refugees repay the loans, they will be building a track record in their new locations.
Sahar is one of those refugees. When she lived in Idlib, a city in northwest Syria, Sahar met with two of her friends daily for tea. After the city became a focus of the conflict, she resettled to Lebanon with her family. Her friends followed. Sahar’s husband found work at a vegetable market, but it wasn’t enough.
Sahar and her friends took a loan from Kiva and bought baby clothing and women’s dresses that they beaded and embroidered. Each day they made the rounds selling the clothes before making more. If one of the women couldn't make the monthly payment, her friends pitched in.
Their business is now doing well, and a local retailer has asked them to customize some of its clothing as well. The income has stabilized the three families' finances, helping them pay medical bills and rent.
A collective loan also helped Iman after she resettled in Lebanon. Growing up, Iman watched her mother make different types of mouneh, or preserves. She learned how to drain yogurt to make cheese and to make spicy pickled vegetables. In Lebanon, Iman briefly worked as a maid, and after volunteering to teach Syrian children, was eventually hired as a teacher. Her husband also found work, but money remained tight for the family.
A neighbor asked Iman to join her and another women in applying for a loan from Kiva. She did, and used the funds to buy ingredients to make mouneh that she now sells. Building a business based on her mother's recipes keeps her connected to her past and to Syria's culinary history while teaching her own daughter about strength in adversity.