Kiva.org is putting Cambodians in touch with global lenders via local microcredit organisations, no matter that the borrowers themselves haven't necessarily heard of the innovative Web site.

Photo by: HOLLY PHAM

Kiva borrower Le Mak (left) outside her shop with HKL's Head of Operations Department Toch Chao Chek. 

MICROFINANCE is known for its grassroots contact with rural, low-income populations. So using the Internet as a tool to boost this distinctive style of lending might seem like a mismatch.

However, Cambodia in particular is proving that online microlending organisation Kiva.org - the world's most visited microfinance Web site - has hit on an innovative approach that utilises the reach of the Web to further boost lending to rural areas.

Set up in 2005 by Matt Flannery and Jessica Jackley, both of the United States, not-for-profit Kiva profiles would-be micro-borrowers across the planet, connecting them with potential lenders who lend as little as US$25 electronically using the site. The organisation says one of its core values is transparency, meaning that lenders can track the progress of their loans via Kiva's Web site.

Kiva sends its fellows to its local partners for assistance, which includes anything from posting profiles to managing repayment data that goes back to Kiva as part of feedback.

In Cambodia, Kiva uses four local microlenders - Angkor Microfinance Kampuchea (AMK), Hattha Kaksekar Limited (HKL), Maxima Mikroheranhvantho and Credit - to work as field partners that profile potential borrowers on the Web site and disperse the loans that are raised online.

Field partners are required to hire technical coordinators to put profiles on Kiva.org, but they say that this minimal investment easily pays off through access to a new funding source - ordinary people worldwide.

"We have no problem with capital because we ... have access to many sources," said Dr Uong Kim Seng, Maxima chairman and executive director.

It is these field partners who receive the 2-3 percent interest payments as would be the case for conventional micro-finance lending, meaning the institutions themselves become the vehicles for microfinance with Kiva and not the lenders, a twist on the standard microfinance model established by the likes of Bangladesh's Grameen Bank.

"We spend a lot of time explaining to clients the benefits of exposing their profiles to the world through Kiva," says Julie Picquet, a Kiva fellow who worked for Maxima from February to May. "Almost every single profile on Kiva gets funded."

That includes Le Mak of Kouk Chambat village, Choam Chao district, who took a series of Kiva loans to help stock for a grocery store. She said she now earns US$12 a day, enough to support five family members, including a son who lost his job in a garment factory.

Ouch Chenda, 40, a mother of four from Kampong Speu, has borrowed from Kiva via HKL $1,000 loan to buy three cows and five pigs before repaying and borrowing again, this time $3,000 from HKL's larger loan package, to purchase a 30-metre-by-100-metre area of pasture to raise the animals, she said.

"When HKL lent to us, we were able to buy them [the animals and land], and we saved part of our monthly salaries to repay the debt," said Ouch Chenda, admitting that she has never heard of Kiva.

And even if many of the Kingdom's microborrowers are not aware of what Kiva is or how it works, the site has been perhaps more successful here than anywhere else.

Cambodia already has the most developed microfinance environment in Asia, says Darren Miao, Kiva's partnership manager for Southeast Asia and the Pacific.

"Cambodia has a well-defined set of regulations governing the microfinance sector," Miao says of the Kingdom's $300 million microfinance industry. "MFIs [Microfinance Institutions] are well-regulated by the Cambodian government, [and they] have been very proactive on improving their services."

The Kingdom's well-established MFI sector has, however, become a victim of its own success in going online.

"Kiva found its Cambodia partners' share of the portfolio was a bit too big. They had almost been too successful at fundraising," says John Briggs, a Kiva fellow who served at Maxima from October last year until February. "In the interest of risk management, when Kiva rebalanced its global portfolio it had to give its Cambodia MFI partners a slightly smaller share of the overall pie."

Darren Miao says that the Kingdom remains one of the few microfinance environments in Asia that is actively sought after by both debt and equity funds, indicating its viability and sustainability.

"Our Cambodian partners are some of the largest MFI partners in the Kiva network in terms of gross loan portfolio and asset size," he said.