Chinese Peasants’ Version of Facebook

With the help of the Internet technology, person-to-person (P2P) microfinance is changing the way that people connect cross the borders. “WOKAI” is a non-profit organization founded in 2007, with the mission of lifting rural Chinese residents out of poverty by means of online microfinance. Inherited from a popular website Kiva.org, Wokai.org takes the Internet as the vehicle to help rural entrepreneurs finance for the creation of their small scale businesses in the least developed areas of China.

Microfinance means financing small business activities by micro loans, seen as one of the most effective solutions to poverty elimination in the world wide. Around 200 million peasants live on less than $1.25 per day. Despite the booming urban development, people living in rural areas, most of which are agricultural population, are still staggered in poverty. “Wokai”, literally meaning “I start” in Chinese, is based in Oakland, California. With core operations based in Beijing, Wokai established an online microfinance website for Chinese rural borrowers and international donors to reach out each other. Casey Wilson and Courtney McColgan, the co-founder of Wokai, starting from $50,000 raised from their friends and families two years ago, has amassed a team of more than 80 volunteers. Wokai is therefore known as the Facebook for China’s farmers.

On the homepage of the Wokai website, donors can easily find a full list of entrepreneurs who are raising funds for their business. A comprehensive profile of each individual borrower is noticeably elaborated in a separate interface comprising, among other things, of business types and proposals, physical locations, borrower’s household and credit status, as well as total fund volume and volume to-be-financed. It is wholly at donors’ discretion to select the borrowers and the projects, to affirm the amount of their donation. Once they decide on which peasants and how much they are going to fund, register donors can go over the whole procedure through their Wokai account. Wokai also enables donors to pay their donation either by online bank, or by check issuance. To a great extent does this flexibility facilitate and encourage people living in the US and other developed countries to do their philanthropic part in Wokai projects. As of November 30, 2009, there have been 653 donors- notably in the US-contributing up to $105,756 to finance 203 villagers, with a wide variety of projects ranging from noodle stand to sheep herding. On top of the webpage are the simultaneous updates on the statistics placed at the most eye-catching position. “Most of Wokai’s donors are in their 20s”, said a Wokai Public Relation Representative, “who have some family or business connection to China, and work in charity or finance”. In light of a large population of Chinese immigration, Wokai has recruited a talented team of volunteers in west coast of the US, helping with business plan, website design, publicity and marketing. Today Wokai has enjoyed a remarkable success, evidenced by other three booming Chapters in San Francisco, Seattle and New York.

Spread by word of mouth, Wokai’s story has had a group of loyal followers, surprisingly analogous to the “Obama Effect”. Casey’s Speech at Google is circulated through the Facebook, Twitter and YouTube. The New York Times is also inclined to cover Wokai for a feature story. Multi-media have therefore become Wokai’s major financing method. Since its operation is financed separately from the donations to the borrowers, Wokai launches campaigns for fundraising via the Internet and newspaper media as NGOs usually do. “It’s one thing to get people to go online and support our borrowers,” explains Casey. “It’s another thing to get funds to support our actual organization.”

On the ground, Wokai employs a professional due diligence (DD) team as the focal point, in charge of training and monitoring a broader network of field partners. Workings actively in the satellite villages, field partners are responsible for site visit to screen and archive information of borrowers in their communities. What’s more important is to post the leads on Wokai website upon the evaluation of the DD team. Casey believes that Wokai has not functioned as well as Facebook because most farmers don’t have personal computers. Their communication with their contributors merely relies on Wokai’s staff and Field Partners. Still, Wokai and its partners play a critical role to bridge the gap between contributors and rural entrepreneurs. Wokai and Field Partners are also responsible for administering overseas funds received to specific rural recipients. In addition, there are micro-loan contract templates available for borrowers’ return schedule of their loans. In that sense, Field Partners are to collect loan repayments from borrowers and send regular updates to the DD teams. In general, contributors can get as much information through Wokai as they need to make decision on their donations. To embed in the principle of transparency and fairness, contributors are entitled to the tracking system, through which they are able to trail their money on line and receive timely updates on the projects and the villagers they fund. After a fully return, contributors can also decide to renew their donations for another two terms. Through this well-organized mechanism, Wokai reports a credible history of loan repayment.

Both academia and public media speak highly of this online form of “grassroots” finance. With their promising track records, Wokai hope that by their endeavors, one day it would be the real Facebook for Chinese farmers to network with international contributors. “Within the next three years, we hope to raise close to US$ 2.2 million from 17,000 users online – and that’ll fund over 6,000 recipients to start small businesses,” predicts Casey.

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