While microfinance has been exceptionally successful in parts of Asia, it remains an imperfect solution. Women's microbusinesses grow more slowly than men's, according to some studies, presumably because women are supposed to work from home and look after children at the same time—and these constraints also make it difficult for women-run businesses to graduate to a larger scale.

Moreover, microfinance hasn't worked nearly so well in Africa as it has in Asia. That may be because it is newer there and the models haven't been adjusted, or because populations are more rural and dispersed, or because the underlying economies are growing more slowly and so investment opportunities are fewer. Poor health and unexpected deaths from AIDS, malaria, and childbirth also create loan delinquencies that undermine the model. And the "micro" refers to the amount of the loan, not to the interest rate: It's expensive to make small loans, and so borrowers often must pay annual interest rates of 20 or 30 percent—a bargain compared to commercial money-lenders, but a level that is horrifying to Americans or Europeans. The interest rate is fine when the money is pumped into a profitable new business, but if the money isn't invested soundly, then the borrowers become trapped in mounting debts. Then they are worse off than before—and we've heard of that happening to women in Kashf's programs.

"Microfinance is not a panacea," Roshaneh says. "You need health. You need education. If I were prime minister for a day, I would put all our resources in education."

Not everybody can walk away from an international financial career like Roshaneh and Sadaffe and start an institution like Kashf. But absolutely anybody can join them in arranging microloans to needy women like Saima—by going to a Web site, Kiva is the brainchild of a young tech-savvy American couple, Matt and Jessica Flannery, who visited Uganda and saw the power of microfinance there. They knew that Americans would like to lend if only they knew the recipient, so Matt and Jessica thought: Why can't a Web site make the connection directly? That's when they started Kiva. If you go to the Kiva Web site, you see people all over the world who want to borrow to finance small businesses. Those would-be borrowers are vetted by a local on-the-ground microfinance organization.

A donor funds a Kiva account with a credit card, and then browses among the possible borrowers on the site to figure out to whom to lend money; the minimum loan is $25. Our own Kiva portfolio at the moment consists of loans to a pancake saleswoman in Samoa, an Ecuadorian single mother who has turned part of her home into a restaurant, and a woman furniture maker in Paraguay.

Excerpted from Half the Sky by Nicholas D. Kristof and Sheryl WuDunn. Copyright © 2009 by Nicholas D. Kristof. Excerpted by permission of Knopf, a division of Random House, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.


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