Kiva starts a pilot program of microlending to students in three countries. Its president compares the move to Amazon adding music to its inventory.
In a press release, Kiva President Premal Shah said the following about the new program, which, after this year, Kiva is planning to expand to 15 countries:
We believe the Internet community is in a unique position to share the risk of student lending in the developing world and if these students repay their loans -- as we believe they will -- it could be the very impetus needed to make education accessible for everyone around the world.
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Shah also spoke with Fast Company about the expansion, comparing it to Amazon's adding music to its inventory, after initially just being an online bookstore. It's a logical next step, he says:
What’s happening is there is a risk tolerance because empathy creates generosity and there’s a risk distribution on the website. Hundreds of thousands of people are sharing the risk—spreading across countries and people--there’s a higher risk appetite to try these new risky loan products in the developing world. If you can prove that the repayment rate is high over the next 1 to 2 years, it has a huge demonstration effect for more traditional providers of finance.
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Shah also noted that education can lead to as high as a 300 percent increase in income level, evidence that these loans are likely a sound investment, as well as an act of kindness.
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