Kiva Founder Discusses Efforts to Build Social-Enterprise Powerhouse

Matt Flannery, the co-founder and former CEO of Kiva, a leading nonprofit organization that enables and supports microlending, spoke on “Building a Social Enterprise” to an audience of SIPA and Business School students at Uris Hall on April 23.

Dean Merit E. Janow provided a warm introduction, noting that SIPA was thrilled to feature leaders in social enterprise like Flannery. The event was hosted by SIPA’s specialization in Management and concentration in Economic and Political Development, and is part of the Han’s BiG Social Innovation Speaker Series.

Flannery began his talk by sharing the history of the organization. Inspired by Professor Muhammed Yunus’s microfinance work in India, Flannery and Jessica Jackley founded Kiva in 2004. The mission of the organization is to provide microloans to entrepreneurs in the developing world at low interest rates. A seamstress, goat herder, or a woman selling fish—all are small business owners who could realize their ideas if only they had access to capital.

Kiva started in a small village in eastern Uganda but quickly expanded. Today, it connects lenders and borrowers in 86 countries. It has even begun to operate in the United States—in locations such as New Orleans’ Ninth Ward—and is working to expand.

Flannery explained that one of Kiva’s greatest and unexpected successes to date has been its work in war-torn areas such as Iraq and Afghanistan.

“Inverse rationality is at work,” he said. “The riskier or more war-torn the area, the more individuals wanted to fund and do so more quickly than in any other area.”

Flannery also discussed a new venture he is working on in Kenya, called Branch. The mobile money system transfers loan payments directly to users’ accounts in M-PESA, a mobile banking system used throughout Kenya, including the country’s most remote areas.

The system brings Kenyans access to borrowing in an unprecedented way, Flannery said, with a default rate close to zero. Given the demand in the Kenyan market for microlending and greater access to capital, he said he expects the venture to expand exponentially in the future.

Flannery closed his remarks by offering some wisdom to students.

“Do not overstate impact,” he said. “Financing alone cannot bring someone out of poverty” — it must be coupled with reform in other areas, including healthcare, education, and economic development.

— Kristen Stamboulian MPA ’15