Microfinance Company Connects Lenders, Clients Through Internet

Veasna Prum just received $1,200 to repair and upgrade his home in Phnom Penh’s Dang­kao district. Part of the loan that covered the cost of his renovation came from a university student in the US who learned about Cambo­d­ia when her sister traveled here in March.

“Immediately after reading [my sister’s] e-mail, I went to kiva.org and searched for Cambodia,” Marcella Fedrigo, a 27-year-old graduate student at the University of Maryland, said by e-mail last week.

On Kiva’s Web site, Fedrigo saw photographs of several dozen poor Cambodians seeking loans varying in size from $25 to $1,200, from fish farmers to moto­dops to market vendors.

Kiva, which means “unity” in Swa­hili, is a California-based company allowing ordinary people to lend money to other ordinary people in developing countries via the Internet.

Since 2005, Kiva has facilitated $25 million in micro-loans between average people around the globe.

Based on what she saw on Kiva’s Web site, Fedrigo decided to give three loans right away. She used her credit card to pay $150 to Kiva, who forwarded the loan to Cam­bodian microfinance in­sti­tution Maxima, who then collected the money and brought it on a mo­ped to Veasna Prum, who lives in Dangkao commune’s Moal village in Kandal province’s Dang­kao district.

“It’s sort of just another example of, ‘Oh, small world,’” said Fedrigo’s sister Carla, who was still traveling through Cambodia late last month and was able to swing through Kan­­dal to visit Veasna Prum after he received his loan from her sister in the US.

Maxima’s CEO, Uong Kimseng, said Kiva’s low default rate of 0.1 percent, plus publicity from people like US television host Oprah Win­frey, contribute to Kiva’s growing activity in Cambodia.

“Kiva is the bridge to help len­ders and clients mix together,” Uong Kimseng said.

Veasna Prum is one of many Cambodian clients to receive part of about $2 million in Kiva-facilitated loans since 2006. And Marcela Fredrigo is one of hundreds of thousands of people from around the world to provide an interest free loan through Kiva.

Four local MFIs—Maxima, Credit, Hattha Kaksekar Limited and Ang­kor Mikroheranhvatho—are among 80 institutions from 42 countries to link up with Kiva since its founding in 2005.

Credit, which is based in Phnom Penh, has posted the photographs and loan requests of more than 200 Cambodian clients on Kiva’s Web site every month since June 2006.

Credit’s General Manager Chan Mach said that he hired two additional staff members whose sole job is to post the 200 new clients onto the Kiva Web site every month.

But Kiva loans aren’t right for every MFI. To get involved, one must be a member of the Micro­finance Information ex­change, be audited annually and meet certain levels of performance, governance and risk, Maxima’s Uong Kimseng said.

Within 12 months, Veasna Prum is expected to pay back his total loan of $1,200, plus approximately 24 percent annual interest to Maxima.

Yet as Kiva warns, his loan faces the risks of currency de­valuation, natural disaster and political unrest, and a change in government policy may make it difficult to collect loans.

This doesn’t bother Marcella, who said that getting back the $150 isn’t as important as lending a hand to developing nations.

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