In 1976 in Bangladesh, future Nobel Peace Prize Winner Muhammad Yunus launched the first microloan institution with Grameen Bank. The goal was to help the poorest populations start their own small businesses. Since then, the model has proven its worth, and similar structures have emerged. In 2013, 105.9 million low-income clients around the world were able to borrow $95.1 billion*.
Microcredit has now graduated to the next level by bringing in participatory financing. With this winning partnership, Western economies can now support micro-entrepreneurs in many Southern countries.
Kiva and Babyloan
The pioneer and global leader in online solidarity loans is called Kiva. As its founders describe it, “We are a non-profit organization with a mission to connect people through lending, so as to alleviate poverty.”
Since its creation in 2005, the American association has raised some $832 million from 1.4 million lenders to finance nearly 2 million people in 84 different countries. Kiva has a European – French, in fact! – little sister: Babyloan! Founded in 2008, this socially responsible lending site enables web users to finance loans to the micro-entrepreneurs of their choice in some 20 countries (compared with the original three it offered, Benin, Cambodia, and Tajikistan) and to help them develop their own livelihoods. “Babyloan’s priority has been to defend a social, inclusive form of microfinance,” says the company. Since its launch, 99.92% of the loans granted through the platform have been repaid. But its effectiveness can be seen in more than just numbers.
Lending to generate revenue
Take the example of Masliah, age 51. Thanks to a miniloan from the Babyloanians, this inhabitant of the island of Java, Indonesia, was able to launch a bird-food cricket farm. With the income generated by this activity, she knows her two youngest will be able to continue their education beyond elementary school. Another example is Daniel, age 29. This independent body repair specialist in Quito, Ecuador, was able to develop his small business thanks to microcredit. The loan he took out with the Babyloanians provided the funding he needed to maintain a transportation company’s bus fleet. With this additional revenue, Daniel now has a stable income and hopes to be able to buy his own home soon.
As we can see, this combination of participatory financing and crowdfunding is a source of solidarity and hope. Other players have also entered this market segment to supplement the existing offer. Launched in 2010, Babeldoor has provided a project co-creation platform mixing crowdfunding and crowdsourcing since 2015, for example. The idea is to provide not only funds, but also help and all of the necessary means to develop projects with social applications.
* Figures from the Convergences Microfinance Barometer 2015
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