The first question former President Clinton posed Afghan President Hamid Karzai was one of investment in Afghanistan. While the two touted the foreign investment starting to enter the country, Clinton suggested that everyone could contribute to average Afghans trying to make a living through Kiva.org — an online microfinance network like lendingtree.com where people seeking to loan small, interest-free amounts of money match up with entrepreneurs seeking small loans for a six to twelve month period.
Nick Kristof profiled this website (see screen shot) back in March, which drew my attention and led me to make a few loans — a little less than 6 months later, 44% of the loans have been paid back. The Wall Street Journal recently highlighted the impressive figures they’ve posted including $11.6 million in loans within less than 2 years and only a 0.2% default rate (as I recall, this is much lower than even the highly successful Grameen Bank which had something like a 92% repayment rate).
This is not to suggest micro-finance alone will save Afghanistan. After 30 years as one of the poorest countries in the world not to mention a perpetual governance vacuum with dysfunctional or non-existent state, the country needs a massive infusion of development aid to build up everything from infrastructure to state bureaucratic capacity, far more than the pittance of a sum the US has thus far allocated according to New York Times reporting based on Congressional Research Service reports. And it does no favors that our misplaced counter-narcotics policy seeks to eliminate the livelihoods of the 13% of the population and a third of the country’s GDP.
But the micro-finance revolution will continue to make waves as it becomes increasingly profitable for mainstream banks and lending institutions and as it reaches a broader set of pooled lenders through unique delivery vehicles like Kiva.org.