corprewland

Kiva.org is an organization that focuses on making rural microloans. A microloan for these purposes is a smaller development loan, useful for buying, say, a couple of goats or a truck instead of a large infrastructure loan for buying schools or new highways. It’s useful on more of a personal level, and it’s a smaller need that doesn’t get served well by traditional NGOs. Kiva is a platform for these rural focused loans, with an initial focus in Uganda.

Why this is significant is that Kiva has managed to remove several levels of aggregation of loan in order to more effectively reach the people with the needs and the money, and to connect them directly. Removing layers like this is called disintermediation.

Kiva.org is an organization that focuses on making rural microloans. A microloan for these purposes is a smaller development loan, useful for buying, say, a couple of goats or a truck instead of a large infrastructure loan for buying schools or new highways. It’s useful on more of a personal level, and it’s a smaller need that doesn’t get served well by traditional NGOs. Kiva is a platform for these rural focused loans, with an initial focus in Uganda.

Why this is significant is that Kiva has managed to remove several levels of aggregation of loan in order to more effectively reach the people with the needs and the money, and to connect them directly. Removing layers like this is called disintermediation.

The individuals featured on our website are real people who need a microloan. They are waiting for socially-minded individuals like you to lend them money. They will not receive a loan until a Kiva lender provides it. Our data is real, not representative. Once funded, sponsored entrepreneurs are diligently tracked and the real results of their efforts are propagated through email updates and on our website.
Once donors make donations to an MFI or a nonprofit, tracking where that money actually goes is difficult, if not impossible, in most situations. Kiva removes several layers between lenders and recipients and makes tracking funds simpler and easier. In fact, Kiva allows lenders to see firsthand how, when, and why the work of their sponsored enterprises succeeds or fails.

So, through disintermediation, they’re offering a more connected experience to the lender, enabling them to get more information on the progress of the progress.

For the lender, the risks of this model are higher. The lender isn’t on the ground, so they can’t make a good assessment of the needs — and may, in fact, have no ability to accurately assess local confitions even if they were there.

To counter this problem, Kiva.org has created a specialized loan product, which is a loan that becomes tax-deductible for individuals if it’s defaulted on. This allows people to derive some of their money back if the loan fails.

Anyway, an interesting example of disintermediation. I’ve been interested in disintermediation a lot o late, and this is the first thing I’m blogging about it. Possibly, there will be more focus over time. Fundamentally, disintermediation is eliminating steps in (information) flow between consumer and producer.