The Abaarso School of Science and Technology operates in Somalia as a non-profit organization. They offer four-year term higher-education loans to help fund tuition. Not only that, but they support even those who cannot afford tuition! They’re now on Kiva to raise even more funds.
This is an excellent opportunity to help our brothers and sisters in a warn-torn, poor country.
Because of war and widespread poverty, some borrowers can’t afford to pay back on time. They keep aside 8% of any loans repaid to help those who can’t.
From their partner page:
For extra security, an 8% fee is charged upfront on loans and added to the amount of principal listed on Kiva.
How does this work? If the loan amount the borrower needs is $625, they ask the borrower to borrow $675 instead, and when the borrower repais $675, they keep $50 (8%) aside to their Shared Responsibility Fund to help support other loans.
Details from Kiva support are below (I asked for a concrete example).
No worries! I agree that it helps to use a concrete example. Here is an example of one of these borrowers: http://www.kiva.org/lend/592671
1. Abdi goes to the MFI and requests a loan of $675 (when the loan is posted on Kiva, the 8% is part of the total loan amount)
2. The MFI agrees and loans $675 to Abdi
3. The MFI posts a loan on Kiva for $675
4. The borrower pays their portion of the $675
5. $50 (8%) goes into the Shared Responsibility Fund. Students who fall behind with their repayments, use this fund, eventually returning credit to this fund
6. Abdi repays her loans in full to the borrower ($675)
-The 8% is included in the amount that the MFI lends the borrower
-The 8% is included in the amount the borrower pays the MFI
-The 8% goes into a fund for other students who have taken out loans. Essentially it works as a “slush fund”.
-The 8% is included in the repayments to the lenders
This is all the best case scenario. The hope is that the Shared Responsibility Fund will be used and then refunded.