How Housing Loans Can Change Lives

Carlos, a single father to a chronically-ill child, is building a house with his Kiva loan so he can start a small store in his home.

When I lend on Kiva, I want to support a budding entrepreneur, someone that shows innovation in their small-scale business, has big dreams and is now able to run after them. I like to imagine that as a Kiva lender, I am a small part of a catalytic process that opens the floodgates to the borrower’s success. I lend because I want to do something selfless, however when it comes to choosing borrowers, my selflessness dies out a bit as I selfishly pick the borrower who I think will have the biggest short-term success; I am hungry for the satisfaction of seeing my $25 move a borrower from a fruit stand on the side of the road to a store-front, or another concrete step in the world of business.

So why, when I can make such a huge difference in the life of a motivated entrepreneur, would I choose to lend to a borrower who needs a loan to buy cement and iron rods to continue building their house? They won’t even be able to finish their house with this loan, but simply continue building it. They clearly won’t be making a profit from building their house, so how will they repay this loan? How will my $25 even impact this borrower?

Lalita, a single mother of one, said that is would take 20 years to finish her house without the support of Kiva loans.

What if you learned that by lending $25 to a borrower in Mozambique to buy cement and iron rods simply to continue building their house, you could change their social status? In Mozambique, the lowest minimum wage is USD 61.50 per month. However, the cost of living in Mozambique is very high. From one income, a single parent is responsible for paying for all food, rent, transportation, parents’ living costs, and school tuition for their children (and oftentimes nieces and nephews who are orphaned and in their care). There is no way to break this constant cycle of using all of one’s monthly income on living expenses without building a house. By building a house, the borrower no longer has to pay rent, and will have a little extra money to invest in a small business or go to university, the next step out of poverty. Building a house also marks a significant life achievement; many borrowers have never owned anything of value and building a house marks a significant step in social status, as well as demands respect for the hard work of the borrower. Although the short-term impact of lending $25 to a borrower for personal housing expenses is much harder to recognize, be assured that your impact is even larger than serving as a catalyst - you are creating an environment in which opportunity can grow.

About the author

Sophie Aigner

Sophie comes to her Kiva Fellowship with international work experience and a commitment to serving the underserved. She gained intercultural and training expertise serving at a non-profit program in Brazil, studying abroad as a Rotary Youth Exchange Student, and conducting research on social and cultural barriers to safe sex habits in Indonesia as a Critical Language Scholarship Participant. After being exposed first-hand to the effects of poverty in developing countries, she became interested in micro-finance while serving as a capacity-building intern for the Global Women in Management workshop put on by CEDPA in Washington, DC, where many of the participants were managers of micro-finance institutions around the world. She went on to serve as the Training Coordinator at Chrysalis, a non-profit in Los Angeles that works to alleviate poverty by helping low-income and homeless individuals secure stable employment, where she created and facilitated financial literacy and career development workshops. From this varied experience in the global non-profit sector, Sophie has become passionate about helping low-income populations achieve self-sufficiency, and is thrilled to support Kiva’s mission of alleviating poverty through micro-lending as a Kiva Fellow in South Africa and Mozambique.