The New Microfinancing: SMS-Based Layaway To The Rescue
By Gregory Ferenstein
KickStart has introduced an innovative layaway program to African farmers so they can invest in low-cost irrigation pumps.
Microfinance, the Nobel Prize-winning initiative to turn aspiring Third World entrepreneurs into self-sustaining CEOs, has long been the only game in town when it comes to offering developing world entrepreneurs a viable and sustainable form of funding. But other financial instruments may work just as well--if not better--at supplying small farmers around the world with capital and a path out of poverty.
KickStart, a nonprofit that sells human-powered irrigation systems for entrepreneurial farmers, has successfully introduced an SMS-powered layaway program in Kenya, forcing buyers to set aside tiny increments into an electronic bank, rather than store cash under a mattress where it's prey to poor business practices, demands from relatives, impulse purchases, theft, and emergency needs--all of which contribute to the "poverty trap."
