Updated May 2012: Latest Recipients | Loan Status | About Interest Rates
CSTN has always been about helping individuals fulfill their solo travel dreams. After twenty years of connecting internationally with the global tourism industry and with other solo travelers, I, as CSTN founder, began thinking of such singular journeys in a less self-centered way.
Doubtless, there are few travelers – solo or otherwise – who have not been dismayed to see sights of extreme poverty and need in many places we visit. Thankful for our blessings, we've wished to do something to help ease such abject circumstances. But what? There are, of course, dozens if not hundreds of charitable organizations whose aim is to do good in developing countries. Some, CSTN has investigated and, in the past, has raised funds for a few, but only in a sporadic way.
In 2008, I began searching for an organization that would provide a compatible and ongoing way of adding philanthropy to the CSTN mandate. Finding Kiva was my first introduction to the concept of micro-financing.
Kiva is about inspiring and empowering individual dreamers one by one. Through a system of small, person-to-person loans, people who otherwise have no hope of getting credit, have an opportunity to lift themselves out of poverty and fulfill their personal dreams. Individuals helping individuals help themselves – a perfect fit for CSTN.
Since April 2008 CSTN has been lending 50 per cent of every registration fee to individual entrepreneurs via Kiva. A report on funding is regularly updated as follows:
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The nine women in the Shalom Trust Bank are starting their fifth loan cycle. Most group members are from the municipality of Olintepeque in Quetzaltenango Guatemala. Olivia, who is one of the youngest members of the Shalom Trust Bank, is a single mother of two boys, and she earns a living as a street vendor, selling fruits and pupusas (a type of traditional food). Olivia decided to go back to school and is now in the fifth grade. She hopes to continue learning and, one day, become a teacher. Small loans help her to fulfill her life goals.
CSTN portion: $100.
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Dieu Vivant Plus Group is located in the Democratic Republic of the Congo. One group member, Brigitte, is 48 years old, married, and has two adult children who are students. She has been selling smoked fish in Kinshasa since 1998, realizing earnings of about $140 per week. This is Brigitte's eighth loan, which she will use to increase inventory. In the future, she hopes to become a fish provider in her area.
CSTN portion: $100.
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Fifteen women, who live in the city of Luque Paraguay, got together with the hope of helping each other in business. They formed La Esperanza Group, and Lilian is one of the members. She supports herself and two daughters by selling products. Currently she has a lingerie and electronics store. By all accounts, she's a hard worker, eager to expand her product lines. A loan will help her buy different products such as clothing, cell phones, and other electronic items. As a goal, Lilian wants to keep improving her business and to give her family a better quality of life.
CSTN portion: $100
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Thomas Dominguez Meza, 63, is president of the Estrellas Unidas (United Stars) Group, composed of 8 farmers living in a village located in the Intibucá municipality of Honduras. Agriculture is his family's only source of income. This is the group's second loan, and Thomas plans to use his share to buy potato seeds, manure, and to pay labor costs. The loans help him improve production, increase profits, and thus improve his family's quality of life.
CSTN portion: $100.
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Abdulatif, lives with his wife and three children in Bobojon Gafurov Tajikistan. He inherited a rope weaving business from his mother and has been involved in the business for 30 years. His wife helps and together they deliver completed ropes to their clients. The loan is needed to buy appropriate threads.
CSTN portion: $100.
Excerpts from field report by Kiva Fellow, Meg Gray, working in Nicaragua with Kiva field partner CEPRODEL
In Nicaragua every road has character, and usually this "character" makes it hard to get to CEPRODEL's clients. Now, besides being an inconvenience, why does this matter? It matters because bad roads are one of the factors that contribute to high operating costs for a micro-finance institution (MFI). Here are several more reasons [why CEPRODEL charges 36% interest].
Populations are often very spread out. Even with centrally located offices, many clients have no way of visiting the branch and thus [loan officers must travel to individual clients].
The administrative cost [time, manpower, and paperwork] of a loan is fixed no matter how small it is.
Frequent repayments (often daily or weekly) are more labor intensive. Many CEPRODEL loan officers spend every afternoon walking or driving from business to business collecting repayments.
Now, how are MFIs supposed to pay for all of this? Yes, they could keep seeking out grant money year after year, but I, for one, would like them to be sustainable. The only way to do that is to charge enough interest to cover operating costs.
While rates may seem ridiculously high, as long as we have loan officers needing to drive 30 kilometers through the mud on a motorcycle to spend an hour (or more), all for a loan of $250, then yes interest rates are going to seem high. But financial services will also be reaching people who have never had these opportunities before.
Diane: At first, I was rather alarmed to find that interest charged to recipients seemed excessively high, but the above explanation puts things in perspective. Interest and fees do vary considerably between field partners, and Kiva lets lenders (like us) check the fundamentals of all field partners. Those checks include interest and fee comparison charts, as well as profit margin declarations. Incidentally, just to be clear, we lenders invest the capital but do not receive interest on return. And Kiva operates solely on voluntary donations.