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THE INEVITABLE ANTI-U.S. BACKLASH HAS STARTED ON KIVA
By Leena Rao
techcrunch.com
July 3, 2009

http://www.techcrunch.com/2009/07/03/the-inevitable-anti-us-backlash-has-sta
rted-on-kiva/

When we reported on Kiva.orgıs decision to open up its micro-lending
platform to U.S. entrepreneurs, Kiva CEO Premal Shah told us he was
concerned about backlash in the community. Shah acknowledged that the
decision to open lending to U.S. recipients may draw criticism because it
goes against the idea on which Kiva was founded -- lending to help
development in third world countries where credit options are limited.

It looks like Shahıs prediction was correct. There is now a lending team on
Kivaıs community platform titled ³Unhappy Kiva Lenders.² The members, which
total 375 lenders from around the world, are angry that Kiva is extending
loans to U.S. entrepreneurs. The teamıs page states that ³including
borrowers from the USA has undermined the very core of what made [Kiva] so
unique and special; small, impactful contributions to entrepreneurs in
impoverished situations in developing countries.²

The tirade on the page is harsh, calling the decision ³shameful and
disgraceful² and a deviation from Kivaıs core mission. The group cites an
example of a recent Kiva loan request from a U.S. entrepreneur who had a
college degree and a career in architecture who wanted to start a business
in website design. The loan he requested was for $7000 to start the
business, an amount the lenders suggest could help 7 to 10 different
borrowers in other parts of the world.

Kivaıs stated mission is ³to connect people through lending for the sake of
alleviating poverty.² The anti-U.S. lenders claim that lending to U.S.
entrepreneurs doesnıt alleviate poverty because Americans arenıt living in
true poverty, compared to people in underdeveloped countries.

- US borrowers do not have to pay to send their kids to elementary school.

- They donıt have to build their own house.

- They donıt have to walk miles to get the bare minimum of medical careŠ.if
needed they can access FREE, generally high quality medical care.

- They have a system of laws and courts in place that work.

- They enjoy police and fire protection.

- They generally have access to inexpensive and dependable public
transportation.

- They take for granted electricity, clean water, inspected food and indoor
toilets.

Some of that may be true. On the other hand, Shah makes a compelling case
for the need for a micro-lending platform in the U.S. He says more than 10
million U.S. business owners face difficulty obtaining capital -- even
before the credit crisis and economic slowdown which made lending tight. And
thereıs no doubt that with the credit crunch creating a drought of lending,
small businesses in the U.S. are finding it tough to find funds, especially
if their financial history isnıt stellar. Finally, there is nothing wrong
with giving U.S. lenders the opportunity to boost entrepreneurship at home,
especially at a time where jobs created by small businesses can help lift
the economy out of a recession.

It seems to me like the angry protests are misdirected. Kivaıs lending
program has long been hailed as one of the more innovative platforms on the
web and its ambitions have always been towards helping foster
entrepreneurship (as well as alleviating poverty) in various areas of the
world. Kivaıs decision to offer microlending to U.S. entrepreneurs reflects
a genuine need for additional lending in the U.S. economy. And who knows?
Kivaıs policy may attract a new crop of lenders who want to help at home
first, and once they get hooked, spread capital overseas as well. The more
capital that goes into the Kiva system, the more chance borrowers everywhere
will have to eventually tap into it because many Kiva lenders simply recycle
their loans as they are paid back.

Weıve contacted Kiva.org for a formal response.

...........

Kiva's U.S. Entrepreneurs:
http://www.kiva.org/app.php?page=businesses&countries[]=us&status=All

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Published by David Sunfellow
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