NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

A few days ago I was having coffee with my friend Mike, who was describing the reason he is passionate about education: “I truly believe that improving education today is critical to solving the problems the next generation will face.” Many would agree with Mike’s sentiment, but the question of how best to help remains.

Consider “Mel Gibson”, a young man with a creative pseudonym whom I met while traveling in Malawi. “Mel” was nineteen at the time, but he had been an orphan for several years. Growing up, Mel’s older brother had looked after him and once he graduated from the local elementary school, Mel worked full time mastering the family trade: creating wooden artisan crafts. As I quickly learned, Mel was a far better salesman than carpenter and he possessed a rare charismatic talent. He taught me how to play the traditional Malawian game, Bao Kiswahili (similar to Mancala but much more strategic), and we spent the afternoon talking and sharing stories. Between rounds of counting out beads, Mel confided in me that he had always dreamed bigger. The fact that he spoke English so well was evidence of his dedication to education. Mel had several ideas for how to help his village improve its lot, but he lacked the education to get started. He wanted to put together a company to sell clean drinking water or build a hostel and train tour guides, or even just earn money in a proper job to support his younger (also orphaned) siblings. Unfortunately, Mel couldn’t afford to leave his family and pursue a higher degree. He admitted that he felt stuck, trapped, but he smiled and considered his next move.

I just sat there and thought about what a pity it was that this talented, smart and ambitious young man lacked any path to pursue his dreams. My mind was drifting and he had to bring me back to reality: “Mr. Bryan, it’s your turn, what will you do?”

What can I do? There are countless Mels across the world, lacking opportunities to pursue education. Fortunately, the last few years have seen the rise of several opportunities for those in Mel’s situation, from post secondary skills training, like that provided by Akilah to the introduction of Teach for All, Teach for America’s global counterpart. However, a recent Economist article has highlighted one of the most important innovations in global education: microloans. The article, entitled “Funding poor students could be the next big thing in microfinance“, featured Vittana – a pioneer in the space. Vittana is a rapidly growing organization that is demonstrating the feasibility of leveraging microfinance to provide poor students with access to loans. To date, Vittana has provided over $350,000 in loans to 500-plus students and has maintained an impressive 95% repayment rate. Still, the battle to provide loans to prospective students globally is in early days.

The last few weeks have featured two milestones for aspiring students at the BoP. At the Clinton Global Initiative 2010 meeting, Vittana announced that it has expanded its student loan partnership to Microfinance Institutions in Africa. Additionally, Kiva now offers student loans in addition to loans to small businesses.

Recently I had a conversation with Lisa Lindberg, Vittana’s Marketing Director, about the news.

Bryan Farris, NextBillion.net: Lisa, at Vittana you are pioneering efforts to bring student loans to areas they don’t exist, how do you feel about the recent announcement?

Lisa Lindberg: It’s exciting! We regularly hear from young people throughout Africa, pleading to help us fund their post-secondary education. We really see this as funding for the “last mile” of education. And much like the last mile of a marathon, it’s often the hardest, and the most important. If you can get someone $1,000 extra dollars and keep them in school an extra 6-12 months so they can graduate from a certificate or degree program, you can instantly make good on an 18-plus year investment.

NextBillion.net: With regard to entering Africa, what are your goals?

Lisa Lindberg: As you know, because Vittana provides micro-loans (not charity) to students, we’re able to do this sustainably and at great scale. Our commitment in the Clinton Global Initiative, really captures this vision – by 2015, we want to help 10,000 young people from different African nations achieve their dreams. There is a lot of excitement at Vittana; we’re now in five countries and soon expanding to eight more. Loan volume has grown 30% plus.

NextBillion.net: What was the office sentiment when you read the recent Economist article?

Lisa Lindberg: We think that building upon the success of microfinance by extending beyond a practice of providing capital to build small business, and using microloans to lift students out of poverty with real, employable skills is a needed, effective next step forward. Our whole office (yes, all six of us) erupted into cheers when we read this line in the article: “Finding new ways to fund poor students in emerging markets has become a hotbed of innovation.”

NextBillion.net: Was there a reaction to the news of Kiva’s expansion into microloans?

Lisa Lindberg: We think the more people in this space, raising awareness of what microcredit can do to lift students out of poverty, the better. We see Vittana as a pioneer in starting the student lending model in the developing world and we’re particularly proud of the operational work we do with our partners on the ground, where it counts. The fact that Kiva has joined the movement helps to demonstrate that this model is financially viable for banks and capital markets, which is really Vittana’s ultimate goal. Our collective success will be the proof needed to catalyze access to education for potentially millions.

NextBillion.net: Thank you, Lisa.

Today, as I reflect back on “Mel Gibson’s” question, “What will you do?”, I’m glad that I finally have an answer. I can get involved right now by helping one person achieve their educational goals through a loan on either Vittana or Kiva. With Vittana’s expansion into Africa, young people like Mel can have the opportunity to pursue their educational dreams.