A small farmer in Columbia needs a loan of $500 to purchase more pigs. A group in Peru needs over $1,000 to improve their coffee and cacao cropland. A woman in Pakistan needs $275 to buy a professional sewing machine. You’re given $25 to invest in one of these entrepreneurs. Which one would you chose?
Students in Karen Lynden’s Introduction to International Business class gained hands-on experience in international financial markets as they participated in a micro-financing exercise. Lynden secured grant funding to provide a $25 support code for students in her classes through the Kiva U program for microfinance education. Working in pairs, students explored the microfinance company Kiva. This U.S.-based company vets loan proposals for individuals and groups around the world, particularly in developing countries, then connects lenders with loan opportunities.
Students were tasked with researching the businesses, assessing the potential risk level and annual income of the individuals to determine the smartest lending decision.
The first group of students used their money to fund an entrepreneur in El Salvador who wanted to purchase a metal polisher to increase his productivity and generate a higher profit. The students agreed there was low risk to the loan because he was close to raising all the funds needed and was already bringing in a stable profit.
Other students in the class used their $25 to support a single female farmer in Honduras, an entrepreneur’s grocery services in Guatemala, and a group of women from Senegal looking to buy supplies for their company in order to help feed their families and provide their children an education.
Students also learned how currency exchange rates can affect the outcome of a transaction. When loans are distributed to borrowers in their local currency, the lender can experience currency exchange loss.
“Something that I’ve always believed is that everyone needs help no matter their economic class, especially in business,” said Bryan School student Alphonso Leggett. He was surprised to learn that the entrepreneurs received business training each time they made a payment on their loan. “They weren’t just lent funds for their business but received knowledge that they can implement into their own businesses.”