Microfinance in the United States

            For my practice experience, I will be an intern at Kiva.org, the microfinance organization that allows anyone with a computer make small loans to poor entrepreneurs mostly in developing countries. The other day, as I was browsing borrower profiles, I came across one that surprised me. The profile featured a picture of a young man named Nicholas who wanted money for his apothecary shop, where he sells herbal tinctures. What caught my eye was that Nicholas is in Oakland, CA. Do people in the United States actually need the same services that Kiva provides in the developing world?

While microfinance in the United States isn’t new (one of the most famous organizations, Accion USA, was founded in the early 1990s), Kiva’s program seems to be a part of something more recent. Muhammad Yunus (who many call the pioneer of modern microfinance) founded a branch of the Grameen Bank, originally in Bangladesh, in Brooklyn in 2008. Kiva quickly followed suit, and launched its United States program in 2009. In one article, the author tries to explain the timing of the launch: “Kiva’s U.S. micro loans come at an interesting time, with the global economy shifting precariously and unpredictably, and government rescue plans aimed at huge banks and corporations. Through its person-to-person economic stimulus plan, Kiva is giving individuals a new way to decide where and how to put their money to work helping others” (Heim, Kristi. "Africans Loaning to Americans? Kiva Expands to US Borrowers." The Seattle Times 10 June 2009). What seems especially interesting is that Kiva’s United States program is understood in a specific economic context. Heim seems to think that the program will be successful because of the slow economic recovery after the recession in 2008.

The ideas behind using microfinance in the United States also seem reminiscent of current feelings about government actions. Heim’s idea of a “person-to-person economic stimulus plan” could pass as an Occupy Wall Street slogan, along with “we are the 99%.” Both suggest an understanding that the United States government is not providing enough of a safety net to protect its low and middle class citizens. In other words, Kiva’s program can be thought of as an alternative to poor government decisions.

But can we really compare the poverty in the United States to that in the developing countries Kiva was created to serve? Some say yes—even the “Obama administration is throwing its support behind micro-lending. Under the American Reinvestment and Recovery Act of 2009, $50 million was set aside for the Small Business Administration to lend to microenterprises” ("American Offshoots: Will Microfinance Ever Really Take Root in the U.S.?." Knowledge@Wharton. The Wharton School, University of Pennsylvania, [17 June, 2011]. Web.). But I wonder if Americans like the idea of microfinance in the United States not because it is really necessary but because they are frustrated that the government is not doing enough to prevent current inequality—the inequality that Robert Reich talks about in his new documentary Inequality for All. In other words, Kiva’s program seems to act as an alternative to a frustrating lack of policy in favor of poor Americans.