Updated January 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 subscription fee to individual entrepreneurs via Kiva. A report on funding is regularly updated as follows:
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The 13 members of the communal bank "Socias en Progreso" meet every two weeks In the San Cristóbal community of the city of Portoviejo Ecuador. They are involved in different business activities such as general commerce and various services. One of the group members is 38 year-old Jacqueline. She has a workshop set up in her house where, for 18 years, she has been making all kinds of clothing. She has an employee on a monthly salary. This loan will be used to buy fabric, thread, buttons, and other sewing materials.
CSTN portion: $100.
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Tareq Tareq, who lives in Palestine is a 34-year-old father of one son and two daughters. He is a worker with a decent salary and has managed to build a new house as well as cover his family needs. Now, he wants to do some finishing and decorative work, such as painting and installing tiles, windows, and doors. This loan will enable Tareq to pay the expenses needed to finish the house and provide his family with better living conditions.
CSTN portion: $100.
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Knarik Yesayan lives in Armenia where she keeps an orchard and cultivates land. She has applied for a loan to improve her orchard. New wire and columns will help protect the orchard from intruders, and a supply of fertilizer will allow Knarik to cultivate the land more effectively. Not only will she increase her harvest by improving the quality of the current crop, but also she will have the funds to add more trees.
CSTN portion: $100
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Erastus Muia Muli is 20 years old. He lives in Kenya where he has been selling water for the past year to earn a living. He describes his business environment as favorable because there is limited competition. He has been able to save some of his income, but a loan will give him the extra funds needed to buy a new plastic tank and pipes. He hopes to expand his business and be financially stable in the future.
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.