Dairy farmer Deligeerma needs $642 to buy fodder for her cows during the harsh winter months in northern China. So far, she has received $149 in pledges from four people around the world.
The 37-year-old is one of hundreds of rural dwellers in impoverished areas of China using a Facebook-style social networking site to borrow money from individuals in China and overseas to fund their businesses.
Wokai — “I start” in Chinese — launched the microfinance platform in 2008 and has so far distributed 5.5 million yuan ($870,000) to more than 900 people in Inner Mongolia in the north and Sichuan province in the southwest.
The US organisation works with two microcredit institutions in China, where hundreds of such groups help farmers unable to get bank funding because the size of the loan is too small and they have no assets to offer as collateral.
“It’s really providing them an opportunity to get themselves out of poverty, enabling them to create a sustainable living for themselves,” Wokai co-founder Casey Wilson told AFP.
Wokai’s person-to-person microfinancing platform is unique in China where most micro-loans are funded by the government and institutions such as the United Nations Development Program.
Its website features profiles of hundreds of borrowers who have been carefully screened by local loan officers. They are mostly farmers needing money to buy animal fodder and shopkeepers seeking help to restock shelves.
Individuals around the world can browse the profiles and select who they want to support. Donors then receive regular updates on the borrowers via Wokai’s website.
After the loan is repaid the money is redistributed to another borrower selected by the donor.
Over the next 10 years, Wokai aims to lift 100,000 people out of poverty and expand its model across the central and western regions of China where millions of poor people live.
“With 200 million people still living on less than $1.25 a day there’s a huge amount of development that still needs to be done,” said Wilson.
“China needs a sustainable model of development that isn’t just a handout but a handout where the dollar can be multiplied and leveraged.”
The growing wealth divide between rural and urban residents in China is a major concern for leaders anxious to maintain social stability, especially in the run-up to a major power transition that begins this year.
At the annual parliamentary meeting in Beijing this month, Premier Wen Jiabao vowed to reverse “the trend of a widening income gap” by increasing investment in social security, education and higher wages.
But Du Xiaoshan, an expert on microfinancing in China, believes micro-credit could play a bigger role in helping the millions of people in China who have largely missed out on the benefits of 30-years of rapid economic growth.
“There is a need to help vulnerable groups to narrow the income gap, to get them employed and improve their quality of life,” said Du, a former researcher at the Chinese Academy of Social Sciences, a government think tank.
The wealthy cities of Beijing and Shanghai “do not represent China –they are just a tiny part”, he said.
The benefits of microfinance for the poor were highlighted when microcredit pioneer Muhammad Yunus of Bangladesh won the Nobel Peace Prize in 2006.
Wokai chief of staff Emily Davis said the group’s person-to-person model was an effective way to distribute money to the most needy and enabled donors to see the impact their money was having on the borrower.
“There’s an economic culture of paying back your debts (in China),” she added. “If they have a debt they want to get out of it.”
Until recently Wokai was targeting foreign donors, but it now has official permission to fundraise in China. The group aims to link 200 million “yuppies” living in cities with the millions of poor scattered across rural areas.
“This can really put a face to that poverty in China that a lot of people don’t know about,” said Davis.