‘Bank of Bob’ finances $25 startups

Writer Bob Harris has published  anew book, "The International Bank of Bob." Photo: © 2012 J. Emilio Flores, J. Emilio Flores

Writer Bob Harris has published anew book, “The International Bank of Bob.”

Photo: © 2012 J. Emilio Flores, J. Emilio Flores

For years, writer Bob Harris enjoyed a unique opportunity – traveling to some of the most luxurious hotels in the world on behalf of ForbesTraveler.com.

But, as he bounced from one five-star palace to another, he felt uneasy about the inequality of the industry: The people who build these places don’t get to see or experience them. He decided he would somehow give back his salary from the decadent escapes he’d had.

That’s when he discovered Kiva, the San Francisco crowdfunding site that enables individuals to offer $25 loans to entrepreneurs in the developing world.

Harris began lending via Kiva.org. Then, some friends joined in, building a community of lenders they called, aptly, Friends of Bob Harris. Over the last three years, they’ve collectively lent more than $3 million.

In 2011, Harris decided to go meet some of the entrepreneurs and write about his travels, microfinance and Kiva’s impact. That took him to a dozen countries – Bosnia, Nepal, Cambodia, Kenya and more – and resulted in a book: “The International Bank of Bob: Connecting Our Worlds One $25 Loan at a Time” (Walker & Co; available March 5).

Recently, he spoke with The Chronicle about his travels and what he learned. This conversation was edited for length and clarity.

Q: You’re not a development expert, economist, or one who even knew much about microfinance. So was that a struggle at all for you?

A: Yes, you’re right. I’m not any one of those. So for me, I was very clear early on that this was a learning experience. But that simplicity helped also. Because to a certain extent, the questions that I would ask, the reader would also. And many of these questions were very basic, such as: How do these small businesses work? How do people who are making just $3 to $4 a day balance their finances?

But then, I was also much more interested about their lives – what are their dreams, who are they fighting – very human-level questions. Sometimes you can get caught up in all the data and lose sight of the bigger picture. So it’s not a microfinance textbook; those have been written.

Q: The field of microfinance has faced some criticism, particularly that the interest rates of some lenders are too high. Did you ask the entrepreneurs point blank about this – what did they think of the lending criteria?

A: As a Westerner reading the media, that is the impression you get. But that’s not what I heard. And I would ask people point blank about this, outside the earshot of (lenders’) staff. I didn’t hear complaints about this at all.

I did get feedback on what other changes they wanted. They wanted longer grace periods; a longer length of time between getting the loan and their first payment so that they could think more about long-term investments; they wanted a version of “revolving credit.” I never once heard about the interest rate. And this may not be characteristic of the industry as a whole. But I went to a dozen countries and I didn’t hear it.

The interest rate issue is not contextualized. You can look at a number and say, gosh, that’s really high! But take into account the local inflation rate, or the rates offered by a commercial lender.

Q: Over the course of your travels, which took over a year, did you see any changes in microfinance, developments that illustrate that this field is still growing, experimenting?

A: Mobile. It has to be mobile. Everybody that I talked to was already more involved in mobile transactions, implementing it or planning to add it to their services.

Also, I saw that Kiva’s place in the industry has grown. I visited the offices of Juhudi Kilimo in Nairobi. They are a field partner for Kiva. They actually have been able to attract more funding because they work with Kiva. So, it’s helped them in terms of legitimacy.

Read more: http://www.sfgate.com/business/article/Bank-of-Bob-finances-25-startups-4261013.php#ixzz2V5ltHTLb

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