Last September, I introduced you to Kiva, the world’s first person-to-person micro-lending initiative in a post where I posed the question Can Micro-Finance Make a Macro-Difference? after being referred to the site by a fellow hoser.

In an attempt to answer that question, I decided to conduct an experiment. Since last July, I have been making two loans a month under the hypothesis that if it works, after a year I will have enough capital in the Kiva system to help a new person every month as previous micro-loans get re-payed. To date, the doctor has made twenty $25 Kiva micro-loans (which get bundled with other micro-loans to fund loans to individuals and groups through Kiva’s micro-finance partners). The loans are:

Since my last update in January, where I presented an interim verdict that Kiva appeared to be great, based on the fact that all loans over 3 months old had partial repayments, I’m happy to say that Kiva beat my expectations. I expected that it would take 13 or 14 months to reach the point where the repayments coming in would be enough to guarantee at least one new (minimum) loan of $25 every month, and preferably two, when, in fact, it only took 10 months! As of this month, the cumulative repayments coming in for the month are enough to make two new $25 loans next month.

Conclusion? While the site continues to disclaim (in the footer of every page) that lending to the working poor through Kiva involves risk of principal loss, Kiva is working great. And in this economy, it’s less risky than investing in the stock market and mortgage funds, especially since an investment in Kiva last year would have resulted in your principal being returned to you, while those of us with market-based investments (stocks, mutual funds, 401Ks, RRSPs, etc.) are finding them (considerably) underwater at this time.

Thus, I would still encourage you, if you’re still lucky enough to have any discretionary funds left, to take part of them and try lending through the Kiva platform. Considering that you can start for $25, or the cost of one good bottle of wine (at the liquor store and not your local 300% mark-up restaurant), it’s an endeavor that the vast majority of us should be able to afford. And if even half of the 1.2B people in the developed world made even one loan a year, think of the sustainable difference it could make. That’s something worth aiming for. And if you do lend, remember to tell them that jeff <at> hosernews <dot> ca sent you (because one should give credit where credit is due). (And if you’re a fellow hoser, you can even consider joining his team.)

And remember, there is a supply chain lesson here for all of us. If a good supplier is in trouble in these hard financial times, key customers can band together to keep it financially solvent until times improve through faster payments, guaranteed orders, and low-interest loans. And, in addition to the good feeling these customers will get from knowing they did right, they can also secure long-term capacity from a strategic supplier. Let’s face it — most business people want to do the right thing when given the choice, and many will be quite happy to sign a long term contract or guarantee if you help to bail them out. This means that if you stick by a good supplier when it’s having a bad day, it’ll stick by you through thick and thin.

^*As of April 22, 2009