With 7 weeks past and 8 weeks to go, my Kiva Fellowship is moving right along. As my colleagues around the world, from Cambodia to Uganda to Peru can attest, much of the Kiva Fellow’s life is spent in motion. Already I have had two days where the number of hours spent on buses to number of clients interviewed, if imagined as a see-saw, would make for one very boring recess hanging on a plank suspended in the air. But if my last post dealt with my feelings on productivity (see “Buses and Productivity“), now I am considering the more general implication of movement and capital and Kiva.
Financial institutions like EDAPROSPO function as intermediaries that allocate capital from those who have it to those who need it. In the for-profit world, this allocation occurs for its namesake: profit. In the nonprofit world, however, the allocation is done with a double bottom line: profit (just enough for the institution to cover its costs) and social impact. Lenders on Kiva lend their money for no profit and thus can be said to be interested solely in social impact. The desire to see lives changed for the better powers the movement of capital on Kiva from lenders.
And what of the borrowers? Entrepreneurs, at least here in Peru, join in by moving capital once dormant or confined to the house into the economic sphere. I have seen this phenomenon with one lady I interviewed recently in Puente Piedra (a northern exurb of Lima, Peru) named Nelly Ruth Guerra De Donayre. She decided that the lunches and soups she makes for her family could easily be sold to her neighbors. Now that a large military base is being built two blocks away, she has the incredible opportunity to sell to the hundreds of workers who will be building the base and later the hundreds of soldiers who will live there.
Another woman like Guadalupe ‘Lupita’ Rodriguez Torres first built a network of clients by selling products from an Avon catalogue and then utilized that network to sell her homemade leather goods and build informal savings and loan groups. She has gone even further by preparing breakfast and lunches to sell to the workers at the leather factory where she buys the leather for her aforementioned leather products. The entrepreneurs on Kiva move capital from the household to the economic sphere and thus use these goods and services to create the possibility of profit for them and their families. Borrowing money from Kiva through the Field Partners often allows them to overcome constraints that impede their profits or to create opportunities for faster accumulation (ie loan to buy a taxi rather than renting it, ability to buy more goods to sell, etc.). At the heart of most of the stories I hear are the motivations to provide a better future and education for their children and to build and improve their house (process described in “Buses and Productivity“). Thus, the desire to see lives changed for the better powers the movement of capital by Kiva borrowers.
So what I have seen is that the twin movements of capital, from excess capital to loans and from deficit capital to loans, are powered by a common desire to see lives changed for the better. While the outcome is assuredly right, I believe that the process is beneficial as well. There is something to be said about joining (the) movement. If this movement of capital for the sake of improving individual lives can be likened to a stream, then there are several possible parallels that can be drawn. Like entrepreneurs draw out personal items into the marketplace and gain profits and improve the lives of themselves and their families, so too will we change and be changed by bringing our personal talents and abilities into society. CS Lewis in The Four Loves talks about how each of us draws something out of each other; when one person enters the group, everyone has something new drawn out of them. In the same way an entrepreneur creates new capital for the entire economy, so too do we each add something new when we take a step outside of our private world.
A second parallel with a stream mimics Heraclitus’ famous saying: No man ever steps in the same river twice, for it’s not the same river and he’s not the same man. As the lenders on Kiva continually have new options on how to allocate their capital for the sake of changing lives for the better, so too do we have the option of allocating our capital – our talents and abilities – everyday to someone or something new. No relationship is stagnant; history accumulates everyday. No interaction with a person is ever the same; people change and so every interaction is a new opportunity to invest in someone else. And like the capital invested on Kiva, the effects of our invested time and abilities can have a cascading effect: a loan to one woman allows her to her invest money into the education of her children who may one day use their accumulated knowledge to transform not only their household but their community or even their nation. Imagine if Barack Obama’s paternal grandmother had received a microloan via Kiva to raise goats in rural Kenya, which led to enough saved money to let his father travel to the States which eventually led to the first African-American president (He didn’t but there could be someone today is starting a similar process). As springs become rivulets become creeks become streams become rivers become seas, a single movement into motion can become an ocean.
One of the things that drew me to Kiva was that it allowed me to put my idle capital into motion for the sake of better lives around the world. The cascading effect is particularly appealing. One person’s decision to let an extra $25 be used by another can lead to a changed life for the better. Another person’s decision to share their lunches with others can lead to a changed life and lives for the better. While economists have been slow to move away from the classic labor/capital divide to embrace the hybrid concept of human capital, I think Kiva captures that sense of that new word fantastically. Lenders and entrepreneurs on Kiva are engaged not only in that movement of physical capital but also in that broad societal movement of human capital. With profit, the word human capital becomes a hybrid – what matters is how humans fit into your enterprise for the sake of profit; you cannot separate the two. In fact the economist’s term ought to be humancapital. I believe the negation of profit for the sake of social impact allows Kiva to be in the movement of HUMAN CAPITAL. We are investing in each other, changing others and being changed ourselves, and the result is more humanity, more lives changed for the better. I believe that this is right type of capitalism, one that adds to the reservoir of capital in humans. Whereas profit treats capital solely as a summation of money, social impact treats capital solely as the summation of quality of human life. And as my job as a Kiva Fellow is to strengthen Kiva’s movement of capital, I like to think of it as building the strength of this brook so that it can join other brooks and form streams that will form rivers that will form an ocean that can cover the world. If this capitalist movement of capital facilitated by Kiva can be said to be linked to the bigger idea of HUMAN CAPITAL, then I could say my role as a Kiva Fellow is moving right (capitalism) along…
To move capital to fundraising clients of EDAPROSPO on Kiva, click here./>