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January 15, 2009 5:06 PM

Microfinance: a mecca for 21st century idealism

Posted by Kristi Heim

What can get a crowd of young, hip Seattleites more excited than an REI clearance sale or an afternoon of sun in January? You guessed it. Lending money to poor people. It helps, of course, that beer is involved.

The star of the bimonthly Microfinance and Microbrews event tonight (Thursday) is Casey Wilson, 24-year-old co-founder and CEO of Wokai, a non-profit that aims to expand small loans for the rural poor in China. In Chinese, wo kai means "I start."


Casey Wilson's first job out of college was founding a non-profit.

I took some time out this afternoon to talk with her about the organization, which now has three chapters in the U.S., an office in Beijing and an army of highly motivated volunteers.

siqin wokai.jpg

I asked her why start in China, a country wealthy enough to finance the U.S. national debt.

"It's a good question," she said. When she went to China a few years ago to study Chinese, Wilson said she expected to find a poor country. "I got to Beijing and I'm eating sushi every night. I really thought is this the country that needs microfinance?"

Although in the next 30 years China's economy is expected surpass that of the U.S., "in rural areas it's really still a third world country," she said. The income gap is staggering, leaving about 200 million living on less than $1 a day.

Improving life for people in the countryside of China is a unique challenge. Microfinance has been tried by the United Nations and by the Chinese government, but so far it provides far less loan money than microfinance programs in India, and it hasn't reached people at the bottom, Wilson said.

For migrant workers in cities, the alternative is 16-hour days and conditions that young women can tolerate only for a few years before their bodies break down. This happened to a friend of Wilson's in Beijing, who got sick and had to pay a hospital bill equal to three months' work. Her employer covered the cost, but "that essentially made her an indentured servant," Wilson said.

Wilson and her fellow student-turned-business partner, Courtney McColgan, got their inspiration from, the online person-to-person lending platform. But in China, they ran into obstacles because they were not allowed to register as a foreign non-profit or take money out of the country to repay lenders.

They decided to register as a foreign business in China, and as a non-profit in the U.S., which allows them to solicit funds from donors here and give grants to two Chinese non-profits, Chifeng Zhaowuda Women's Sustainable Development Association and Association for Rural Development of Yilong County, which lend directly to Chinese borrowers in Inner Mongolia and Sichuan. Wokai requires them to have complete transparency, training for borrowers and 95 percent or higher repayment rates.

Borrowers typically use the money to set up a food stall or buy farm animals. They pay an interest rate of 15 to 20 percent on a one-year loan ranging from about $300 to $900.

Wokai has raised about $25,000 in donations and sent an initial grant to its partners. Wilson figures the donation model might work well, after all, since most people never take their money out of Kiva anyway.
The power is the direct interaction between individuals, and seeing the same $50 donation help three cycles of borrowers.

Wokai appeals particularly to Chinese Americans, professionals or academics with an interest in China and parents who've adopted Chinese children, she says. In the future, the Web site can be used as a channel for sending direct support -- not just a loan, but a vaccine, a solar energy panel or a book for someone in rural China.

Wilson divides her time between the group's main office in Oakland, Ca., and Beijing, but this weekend Wokai is holding its launch party in Seattle on Saturday, 6 to 8 p.m. at Spitfire in Belltown. Suggested donation is $5.

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