Advancing Life & Work

Inclusive economy: Perspectives from Premal Shah of Kiva

Cost and access to financial services are critical issues for the working poor. In this guest post, Kiva President and Co-Founder Premal Shah explains why digital technology is one of the greatest democratizing forces in changing this reality.

Post by guest contributor Premal Shah, president and co-founder of Kiva.


At Kiva we have a saying: Talent is universal equally distributed, but opportunity is not. We believe in a world where everyone can participate in their economy. Digital technology is enabling that reality.

In our lifetime, the entire planet will be connected through some device. We are realizing the potential for the internet, technology, and the marketplace to converge and create more distributed opportunities for the financially underserved.

Cost and access to financial services are critical issues for the working poor and digital technology is one of the greatest democratizing forces in changing this reality. When microfinance was pioneered by Nobel Prize winner Muhammad Yunus, his true innovation came from figuring out a risk management system that relied on peer group lending. That eventually scaled to solidarity groups, and people borrowed together, leading to a very high repayment rate—more than 95%. Now more than 200 million people globally have accessed microcredit. The next frontier is to reduce the cost of that access. Today the average interest rate is 35%, this is still high but also a vast improvement from village moneylenders who may charge 85% or more.

Kiva’s mission is to connect people through lending to both alleviate poverty and create economic opportunity. We do that by operating a website where you can read through stories of entrepreneurs in more than 80 countries and make small loans to people. I like to think of it as meets microfinance; for instance, if a woman in Afghanistan wants to buy a cow to start a dairy business, you can participate in funding her through $25 dollar loans, via PayPal. As the business is successful, she repays the loan and you get your loan money back to relend to another person on Kiva. Not only does this model help underfinanced entrepreneurs jump-start their businesses, but it also has a 97% repayment rate.

Thousands of HPE employees have discovered the joy of helping entrepreneurs around the world through Matter to a Million, a five-year, global microloan initiative that provides employees with a $25 credit to direct a microloan to an entrepreneur in one of the 80+ countries where Kiva operates. The campaign launched in February 2014 and has already resulted in more than $11.6 million in microloans made to business owners.

This is revolutionary in corporate philanthropy. Our partnership with HPE aims to demonstrate the power of collective action and innovation when it is integrated into corporate social responsibility. By directing micro-entrepreneurs to receive the $25 loan, an employee can impact an individual, a family, a community and a country—creating change on a global scale.

Just as Kiva brought the power of crowdfunding to micro-lending, we’re now looking to expand and scale this model to ensure that Small and Growing Businesses (SGBs) and Small and Medium Enterprises (SMEs) also have access to capital. These types of businesses can create real formal sector jobs in economies that suffer from poverty. Despite their economic potential, SGBs and SMEs struggle to access loans because they are too large for microfinance and are still too small for commercial lending or investments.

Kiva’s crowdfunding platform can help to provide $50,000 and $100,000 loans to SGBs and SMEs. Small factories are fully funded in the same way that loans for microenterprises are routinely funded on the website. We now need to find more corporate and foundation partners such as HPE who are willing to match the loans that Kiva’s individual citizen lenders provide—these partnerships are extremely valuable indeed and help to grow the movement and impact more lives.

Kiva is in a unique position to help drive new innovations in economic inclusion because risk is divided into small, $25 increments. Also, Kiva’s lenders don’t think like banks. They desire to make maximum impact on the borrowers, issues and regions they care about. Given the increasing rate of change and uncertainty in our world, we need to be more comfortable making little bets, and willing to learn from our failures, in order to prioritize new experiments that help us discover breakthrough solutions. The small businesses that you see on the Kiva website often face failure but what's so amazing to me is their resiliency as they bounce back from challenging circumstances and other causes of failure.

Driving economic inclusion by closing the digital divide is helping to provide the opportunity for underfinanced entrepreneurs to empower themselves and connect with the lending world around them.

Premal Shah photo_small.jpgPremal Shah is the president and co-founder of Kiva, an international nonprofit founded in 2005 with a mission to connect people through lending to alleviate poverty. To date, 1.5 million people have crowdfunded $920 million in loans to 2 million borrows on Kiva. The Hewlett Packard Enterprise Foundation funds Matter to a Million, a global partnership with Kiva through which every employee is provided with a $25 credit each year to lend to Kiva borrowers. More than $11.6 million has been loaned by employees to entrepreneurs around the world. Follow Kiva on Twitter at


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