Tuesday, 4 March 2008

Small loans make a BIG difference

South Medford freshmen use idea from Nobel Prize winner to make Third World entrepreneurial dreams a reality

Above: South Medford High School freshman Carrie Frost uses the classroom’s whiteboard computer to help her world studies class pick the next recipient of a microloan. Below: Ricardo Rivera, center, along with his South Medford High School world studies class pick their next Third World entrepreneur for a loan. pennell photo pennell photo. Bob Pennell

By Paris Achen
Mail Tribune
March 03, 2008


Lim Um, 55, wanted to buy a motorbike to help her and four of her seven children transport cookies and vegetables from their home 10 miles outside Phnom Penh, Cambodia, to sell at the market in the capital city.

Some students at South Medford High School recently loaned her about $25 to help her do so as part of a freshman world studies activity making microloans, small loans to poor entrepreneurs in developing countries with no collateral.

"It's awesome to be able to donate what is spare money to us, and to people there it makes a huge difference in their life," said freshman Kimberly Brown.

For the past month, the students in teacher Dave Lefkowitz's social studies classes have been making the loans online through Kiva, a nonprofit group in San Francisco.

Kiva participants loan some or all of the requested amount, and the borrower makes payments like any traditional loan.

Lefkowitz thought the concept devised by Bangladesh Professor Muhammad Yunus would be a good learning tool to connect students to other parts of the world, some of which they already study.

Yunus won the Noble Peace Prize in 2006 for the role microfinance has played in helping to lift people out of poverty and provide their children with a better future.

"I'm a believer that teaching people facts is boring," Lefkowitz said. "For most of us, if we're not getting involved in society, we are only going halfway. I think you've got to get involved, and if we haven't taught students how to get involved we haven't done our job as teachers."

Lefkowitz's five world studies classes have loaned a total of about $425 to 17 people in Central America, South America, Africa and Asia. Another $170 raised by two students at a dance two weeks ago is waiting for distribution.

The students collect no interest on the loans. Instead, Kiva's field partners, usually small banks in the 41 countries, collect the interest on the loans in exchange for their services.

Kiva has facilitated more than 35,300 loans equaling more than $23.6 million in the past two years since its Web site was launched two years ago.

The average loan request is about $550.

As students scrolled through loan candidates on the Kiva Web site on a Thursday morning, the excitement was palpable.

The class selected Lim Um based on the number of children she has.

"Pay it," one student shouted, as if he were urging on his home football team to score a touchdown.
The class cheered as Lefkowitz clicked on Lim Um's name and typed in a credit card number to make the loan.

He also took the opportunity to review the characteristics of Cambodia, as the class has recently been studying the monsoon weather phenomenon in Asia. He quickly quizzed them on their knowledge of Buddhism, a dominant religion in the country, before moving on.

"I think doing this helps us learn where people are coming from and what other countries are like and teaches us to be more grateful for what we have," said freshman Kris Leitz.

About one-third to one-half of the world's population earns $2 day. That equals the price of a large cup of soda, noted freshman Jed Hamilton.

Teacher Joshua Wallace's Spanish class also has joined in after two of his students who are in Lefkowitz's class made a presentation about microloans. Wallace's class will translate letters between some of the Central and South American loan recipients and Lefkowitz's classes.

"That will take us one step further to see how the money is being used," Lefkowitz said.

Students said they were amazed to learn that poor people in developing countries have a better rate of loan repayment than middle-class Americans. Kiva loan recipients have a repayment rate of more than 99 percent.

"It kind of blows my mind because people in Third World countries have to struggle to pay these loans back," said freshman Corie Davis. "Those who don't have to struggle aren't as likely to pay it back. I don't know why that is, but maybe it's because people in Third World countries know what it's like to live without things."

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