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I've been online since 1971 and I like to smoothe the way for everyone else. Among other things I co-founded Sympatico, the world's first easy-to-use Internet service (and Canada's largest).

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Sunday, September 10, 2006

One way that Web 2.0 is a positive socioeconomic force

In an earlier post I commented on how Web 2.0 can contribute to deflation, unemployment, etc. Now I’d like to mention one way in which it can help people economically.

Kiva.org is a Web 2.0 site that brings certain borrowers and lenders together. The lenders are people who can spare a bit of cash, US$25 or more, and the borrowers are people in less-developed countries who need a small amount of money to establish or expand their small businesses. For instance, I just lent US$100 to Kukuya Kishil Nyare of Isinya, Kenya, as part of the US$450 she needs to buy 4 steers to restock her family’s farm. If you’re reading this on my website rather than through a feedreader, you can see her photo in a box on the left side of the page, together with a meter showing how far along Kiva is in reaching the needed $450. If you see someone else there, it’s because her whole amount has now been raised — while there are plenty more people who are looking for similar loans, including whoever is shown. (UPDATE: When I checked back less than 24 hours later, the whole $450 had already been raised.)

Microcredit” loans have been around for decades, and indeed all the coordination with Kiva’s borrowers is done by existing microcredit organizations. What’s new is that anyone with an Internet connection who has $25 to spare can now lend it — 100% of it, no administrative fees — to someone who can accomplish quite a bit with that money once it’s pooled with the $25 (or more) of a few other people.

In the past, an amount like $25 was just too small to be useful, even for such small loans as microcredit. The administrative overhead of dealing with large numbers of small amounts was impractical. Now, Web 2.0 and Kiva lower the barrier to entry of being a microcredit lender to just $25 and an Internet connection. As CNN Money put it, “Be a global financier...on a shoestring”.

Can you spare $25? You’ll almost certainly get it back, and instead of interest you’ll get the satisfaction that you’re helping Web 2.0 someone improve their economic situation.

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