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View Full Version : Combat poverty with your pocket money - Loan to the working poor




yongrel
01-26-2009, 09:28 PM
THough I'd check back in with this:

Kiva is an organization that allows you all to make small loans to the poor of the developing world. Essentially, it's an opportunity to participate in the efforts of microfinance, which is often an effective way to combat social inequity and poverty.

Their website: http://www.kiva.org/app.php

From their website:

What Is Kiva?
We Let You Loan to the Working Poor

Kiva's mission is to connect people through lending for the sake of alleviating poverty.

Kiva is the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world.

The people you see on Kiva's site are real individuals in need of funding - not marketing material. When you browse entrepreneurs' profiles on the site, choose someone to lend to, and then make a loan, you are helping a real person make great strides towards economic independence and improve life for themselves, their family, and their community. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates and track repayments. Then, when you get your loan money back, you can relend to someone else in need.

Kiva partners with existing expert microfinance institutions. In doing so, we gain access to outstanding entrepreneurs from impoverished communities world-wide. Our partners are experts in choosing qualified entrepreneurs. That said, they are usually short on funds. Through Kiva, our partners upload their entrepreneur profiles directly to the site so you can lend to them. When you do, not only do you get a unique experience connecting to a specific entrepreneur on the other side of the planet, but our microfinance partners can do more of what they do, more efficiently.

Kiva provides a data-rich, transparent lending platform. We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way. To do this, we are using the power of the internet to facilitate one-to-one connections that were previously prohibitively expensive. Child sponsorship has always been a high overhead business. Kiva creates a similar interpersonal connection at much lower costs due to the instant, inexpensive nature of internet delivery. The individuals featured on our website are real people who need a loan and are waiting for socially-minded individuals like you to lend them money.

*****************

Do some research, and hopefully this will appeal to you.

Chosen
01-26-2009, 09:36 PM
If people in the First World cannot payback loans, how in the hell would someone in the 3rd world be able to?

How do you recoup on criminal activity? Violations?

Kiva is nothing more than a well couched micro-redistribution scheme. Why not put your money into savings of some sort?

What about regulatory concerns?

It's better to put capitol into your own community, rather than somewhere else, this is a negative to send money out of country, the community cannot grow.

torchbearer
01-26-2009, 09:37 PM
It would make more sense to loan money to your local crack/meth kitchens.
More chance for a return on your investment.

Chosen
01-26-2009, 09:37 PM
It would make more sense to loan money to your local crack/meth kitchens.
More chance for a return on your investment.

Guaranteed consumption too means lending isn't high risk.

asimplegirl
01-26-2009, 09:43 PM
I think I belong more in the group that NEEDS the donations.

I have never had pocket money, what is that anyway?

TER
01-26-2009, 09:50 PM
Good post yongrel. Though there are risks, there's potential to really help some people out there trying to do honest work.

yongrel
01-26-2009, 09:51 PM
If people in the First World cannot payback loans, how in the hell would someone in the 3rd world be able to?

Actually, microfinance institutions have an extremely high rate of repayment. Grameen Bank of Bangladesh, the most prominent of MFI's, boasts a repayment rate of 97%.

The MFI's (microfinance institutions) often use group lending structures, in which groups guaruntee the loans of their fellow members. Typically groups of 5, they work to insure that all make good on the loan. So far, this has been a very effective strategy.


How do you recoup on criminal activity? Violations?

Kiva grants you access to the infrastructures of established microfinance insitutions, meaning you have access to the law enforcement and loan enforcement systems they use. Though with the extremely high rate of repayment, it's not a huge issue.


Kiva is nothing more than a well couched micro-redistribution scheme. Why not put your money into savings of some sort?

It's voluntary, and it's an opportunity to help the poor through the market. As opposed to welfare, you're using a market mechanism to grant the poor access to credit. Often times, this makes the difference between working as a slave to a money lender for subsistence, and being able to support a family and save.

Also, the amounts individuals would loan through Kiva are relatively small. Savings are groovy too, and not mutually exclusive.


What about regulatory concerns?

Taken care of.


It's better to put capitol into your own community, rather than somewhere else, this is a negative to send money out of country, the community cannot grow.

The marginal benefit of loaning to the developing world is much higher than loaning to your own community. The average American family living below the poverty line has one car and two televisions, according to the Department of Housing and Urban Developement. In Bangladesh, 20% of the population does not has satisfactory housing, which is defined by the Bangladeshi government as a waterproof roof and at least 3 weather-resistant walls. 40% of the country lives below the poverty line.

Small amounts of money achieve a much greater effect in the developing world, in my estimation.

yongrel
01-26-2009, 11:25 PM
bump

Chosen
01-27-2009, 12:03 AM
The numbers don't seem to add up. I cannot find any credible evidence that MFI portfolios have low attrition.

It seems to be a scheme to make profits on smaller amounts of capitol.

It seems like microfinance is targeted to the really destitute, but it seems illogical that someone in that condition has the skills or ability to capitalize on a small amount of money (actually credit). I have heard some of the interest rates have been as high as 50% with 2.5-3.5 months repayment. How does that help the super poor? It seems to me that the capitol is going elsewhere and being used in an authoritarian manner.

What bothers me more is that there is NO true or readily available data that allows for examination of MFI portfolios. There is however this perception that they are the saviors of the 3rd world, which to me prevents any fair analysis of their true viability.

Please prove to me that giving credit to a poor person is the solution to that persons poverty? Especially how a tiny amount of credit will help a very poor person in a market where there is a great deal of government interference?

MFI just seems to create a new class of middle men in poor communities. It would be virtually impossible for the ultra poor to take a successful loan since most microfinance loans have immediate payback. How the hell can they do that?

How does credit make an economy grow? What Microfinance is doing is saying that savings is inferior to credit. The question is to ask why there aren't any savings institutions in regions where MFI' are? I don't buy into the repayment success, it seems that many simply use the loans, not for entrepreneurial use, but for consumption supplementation.

You hear how it is this instrument for poverty alleviation, however no evidence exists which points to this. Bangladesh suffers from massive poverty, with its only successes coming from large scale operations and new markets in the US.

This is absolutely removing potential wealth from a local community.

This is a redistribution scheme to cover consumption short falls in the 3rd world. While Bangladesh seems to have a high repayment (this is what is said, but I don't find any info from an official source that is worthy) others seems to be abysmal.

MFO's have been around since the 70's and have yet to affect poverty in any measurable or tangible sense. The poor need a local savings and loan configuration, not the presence of credit to create real wealth. I cannot see how any MFI helps poverty (besides the fact there is 0 data), there aren't entrepenuers amoung the poor in high numbers it would seem and even if there were it would be more prudent to give them bigger loans to be successful, not $231.42.

Not to mention the crime it can inspire:
http://www.gdrc.org/icm/disasters/Following_Conflict_Brief_6f.pdf

hazek
03-12-2011, 03:47 PM
Two years have passed. Is there any new data or info on this subject?

Deinonychus
03-12-2011, 05:14 PM
I've actually used Kiva. It's pretty cool. I loaned out $225 to some agricultural thing in Uganda and they just owe me one more payment.

hazek
03-12-2011, 05:48 PM
I've actually used Kiva. It's pretty cool. I loaned out $225 to some agricultural thing in Uganda and they just owe me one more payment.

What rate did you charge?

EDIT: Wait a second, I'm just browsing through the website and I must be wrong but it seems like those who lend the money, lend the money for free??

Deinonychus
03-12-2011, 06:58 PM
What rate did you charge?

EDIT: Wait a second, I'm just browsing through the website and I must be wrong but it seems like those who lend the money, lend the money for free??

Yeah, there's no interest charge. So whatever you gave you get back without interest.