Something to Purr About

Macro returns from micro loans

by Nina winham

You wouldn’t know it, but I’m a fat cat international money lender. I just got a notice saying my loan recipient has made a payment. She’s on track—about 50 per cent repaid now—and every payment on time. Business must be going well. Good thing; I’d hate to have to go over there and collect.

My syndicate of 16 other lenders (you didn’t think I floated this loan all myself?) are folks like me: hard-nosed investors looking for an excellent return. Of course, I’m not as fat a cat as one member of my group. Larry, over in Mill Creek, Wash., has made 136 loans, all over the world. Charcoal sales, fruit and vegetables, food production, retail, cereals, plastics, a bakery. This guy is definitely looking for a deal. He must have made some decent dough. And now, he’s just sitting back and reaping the benefits.

Others in my syndicate (doesn’t that sound racy?) are more like me: a few loans in progress, not committing too much too fast. A police officer in Pennsylvania, a surgeon in Quebec. A retired couple in Texas. A pastor, an accountant. We’ve scoured the Earth looking for options for our hard-earned cash. We’ve all landed on this one business in Phnom Penh, Cambodia. For some reason, we all feel Sok Sarann is a good bet for giving us the kind of value we really want in an investment.

OK, you’ve guessed it, right? Even if I hadn’t told you this loan is for only $700 and that the business is a (single) motorcycle taxi, you’d have seen through my fat cat schtick. Sok Sarann is actually a widow with four children who sells chickens at the market in Cambodia. The motorcycle loan means one of her kids can operate a taxi service and bring in additional money for the family. My portion of the loan is a mere $25, but that is enough to invest in ways that still provide a healthy payback. And here’s where I do get hard-nosed: I want solid, real value. I want investments that will last. And I’m getting it all by helping Sok Sarann.

This is all made possible by Kiva (kiva.org ), a microfinance organization that allows you and I to be lenders. For $25, you can help a real entrepreneur somewhere in the world edge their way out of poverty. (They offer gift certificates, too!) For the socially responsible investor, it’s a great place to put some money. It doesn’t pay a financial return (you get your original principal back when your loan is repaid, to withdraw or re-lend), but it pays in other ways.

Fundamental to socially responsible investing is to understand the real human impact of the choices we make with our money, rather than focusing solely on our personal accumulation of cash. I’ve read my loan recipient’s story and seen her picture; I’ll get updates about her progress over time. I’ll know the real results of my loan. And she will know about me.

I want to invest in a world with less disparity and more resilience. A world with a better chance that my own children will not be thrown into hardship because others have desperately few options for taking care of theirs. A world where we measure our personal wealth based on our collective well-being. Those are the returns I want.

Kiva, with a new loan made every 34 seconds this week, is successfully building these returns. Read about the people working to build a better future (a seamstress in Ghana, an agricultural collective in Samoa, a clothing retailer in Peru, a maker of woven mats in Vietnam) to gain a sense of hope and momentum. Read the comments from lenders about why they lend, to feel even more hopeful. We do, after all, have a lot of money stashed in our part of the world. Lending it out one-to-one to make positive change is a great way to reap “fat cat” returns, of the richest kind. Purr!

Nina Winham is principal of New Climate Strategies (newclimate.ca), helping clients build value through sustainability practices and positive change. Although allergic to cats, she is inspired both by loan recipients and by lenders at Kiva.