February 26, 2008 —
When former economics professor and Grameen Bank founder Muhammad Yunus won the Nobel Peace Prize in 2006 for his microlending model, it signaled the arrival of a new way of stimulating growth in the developing world. There was no more need to wait years in the hopes that World Bank loans to government or big business might eventually trickle down to the people who needed them most. Small, low interest loans to local entrepreneurs and families in crisis were financing real, immediate improvements in the lives of poor people — and being paid back at rates that initially surprised even Yunus.
The non-profit organization Kiva allows individuals interested in investing in small businesspeople in the developing world to pick individuals and proposals and help to fund them with loans as small as twenty-five dollars. As the loans get paid back you can either withdraw the money or select a new project for funding. Each week Kiva matches thousands of lenders with entrepreneurs all over the world.
For an in depth look at microcredit, check out this Economist article from 2005 (PDF).