I would like you all to meet Rimbert.

This is Rimbert. Rimbert Patilla Mejía. He lives in Quiquijana, Peru and he’s the proud recipient of my first microfinance loan!

Microfinance is defined as the provision of small loans (microcredit) to poor people. This includes consumers and the self-employed, who traditionally lack access to banking and related services to help them engage in productive activities or grow very small businesses. Many Americans don’t realize that there are billions of people who don’t have access to the banking and financial institutions that are so important to the way we handle money. People in rural and impoverished areas have to rely on loan sharks and predatory lending. Most common are 5/6 loans, or loans with a 20% interest rate. Whats so bad about a 20% interest rate, you ask? The interest of these loans is often compounded on a weekly or even daily basis! This creates a vicious cycle that harms more than it helps, and makes it almost impossible for people to better themselves.

This is where organizations like Kiva.org come into play. Kiva has provided over $100 million dollars in microfinance loans. Kiva was born of the following beliefs from www.kiva.org:

• People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
• The poor are highly motivated and can be very successful when given an opportunity.
• By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.

Kiva promotes:

• Dignity: Kiva encourages partnership relationships as opposed to benefactor relationships. Partnership relationships are characterized by mutual dignity and respect.
• Accountability: Loans encourage more accountability than donations where repayment is not expected.
• Transparency: The Kiva website is an open platform where communication can flow freely around the world.

The main draw to microfinance–for me– is the concept of providing a “hand up” instead of a “hand out”. The ability to empower people to better themselves can have far greater long term impact than simply meeting a need. Not to say that charitable giving is bad, because amazing things happen when people give of their time and money. However, the confidence and satisfaction that comes with making your own way can be a tremendous catalyst in breaking the cycle of poverty.

So, back to Rimbert. He is 32 years old, married in common-law, and the father of 2 children. He alternates his daily activities with his livestock business. He raises his livestock and later sells them interantly. He wishes to expand his livestock business. He requests a loan to purchase heads of cattle. His loan is scheduled to be repaid in 8 months, and the loan is being distrubuted through one of Kiva’s partners in the area: Asociación Arariwa.

Asociación Arariwa has been an active partner on Kiva for over 2 years, and they’ve provided 3445 loans for a total of $2,649,000. Of all of those loans, only 9 are deliquent, and zero are in default. Though Rimbert is a man, Asociación Arariwa’s main goal is to contribute to the improvement of the quality of life of low-income women and their families by offering financial and educational services.

Over the next few months I’ll be providing updates on Rimbert’s repayment progress. I hope that this experiment will encourage you to branch out and fund a loan of your own. As little as $25 is all that’s required to get your feet wet, so get out there, get off your donkey, and bring your cracker!