Kiva and The MasterCard Foundation are kicking off a 5-year, $7.9 million partnership to test, develop and scale high-impact loans serving the unique needs of smallholder farmers and rural populations in sub-Saharan Africa

The MasterCard Foundation is supporting the project to push the boundaries of microcredit, furthering the foundation’s commitment to financial inclusion strategies with high-impact potential.

“This partnership enables Kiva to bring our crowdfunded, risk-tolerant, patient capital to microlenders and social enterprises willing to try new evidence-based loan products that would otherwise be deemed too risky or unproven to try,” said Premal Shah, President and cofounder of Kiva. “Throughout the lifespan of the project we will test what works, experiment with scalability and replication, and share our results across the financial inclusion sector.”

Kiva has seen microloans change lives and lift entire communities. Yet millions of people still lack access to the capital they need and vast numbers of problem solvers can’t find capital to scale their own ideas. Standard microcredit products often follow very rigid repayment schedules that often do not match well with the irregular income streams of the poor, especially farmers.

Kiva has set out to change this picture through Kiva Labs, a set of experimental partners and loan products designed to encourage innovation in the microcredit and social enterprise sectors.

Kiva Labs’ partners such as Juhudi Kilimo have developed successful models for financing productive assets like hybrid dairy cows that more traditional providers view as too high-risk.

Another social enterprise partner, Komaza helps farmers in drought-prone eastern Kenya convert drylands for small-scale forestry that can generate sustainable income for the families’ next generation. The social enterprise equips the farmers with training, as well as with Kiva loans, to plant fast-growing trees on unused land. Komaza then buys the trees and links them to larger lumber markets to meet the demands of Kenya’s rapid growth.

“Kiva has demonstrated ingenuity in developing new ways to enable smallholder farmers and others living in rural and remote areas of Africa to access the working capital they need and want,” said Ann Miles, Director of Financial Inclusion and Youth Livelihoods at The MasterCard Foundation. “We’re proud to partner with Kiva and Kiva Labs to support innovation in this important sector, expand the range of possibilities and empower larger numbers of people to improve their livelihoods.”

Some of the financial products and services under consideration to adopt or scale-up include flexible repayment schedules, providing linkages to larger markets to help clients maximize returns on capital, and financing undercapitalized “would be” innovators and social enterprises.

Through this partnership, Kiva will evaluate the impact of new products and services, and share results across the microcredit and financial inclusion sector worldwide. Kiva is uniquely positioned to push the boundaries of microcredit, and it’s our hope that this work will help change the industry’s perspective on what is deemed “too risky” or “unproven.”

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