Microfinance & You

For this post I wanted to take a break from my usual set of topics to talk about something close to my heart- microfinance.

Of the world's 6.7 billion people:

1 in 6 don't have access to clean drinking water,

1 in 6 live in substandard housing/are houseless,

1 in 3 are malnourished,

1 in 7 are chronically malnourished,

1 in 2 are illiterate,

& 1% has a college education.

This is clearly a problem, but how can we fix it? The fact is, we can't. There is no way that we can end poverty, but we can alleviate it for some through  development assistance. Development assistance initiates sustainable and profitable long-term programs.

Development assistance could come in the form of bilateral aid (government to government), multilateral aid (IGOs, NGOs, non-profits, etc.), commercial banks, or private individuals. All of these have problems. Bilateral aid tends to be self-serving and is generally counterproductive. Multilateral aid lacks organization. Commercial banks, which are also self-serving, require collateral and a minimum loan, which isn't helpful for most in the developing world. Private individuals simply don't have the resources.

Along came the microloan. Microloans are much more practical and convenient for those in need of money. Most commercial banks want collateral- something poor people don't have. Commercial banks also see small loans as a waste of time and see the poor as a credit risk. The microloan gives a small amount of money and requires no collateral. Micocredit makes it easier for the borrow to develop sustainable work, turn a profit, and repay the loan. Solidarity Lending has further increased the strength of the microloan because it brings together a small group that holds each other accountable to paying back the debt and making positive lifestyle changes.

So what does all of this mean for you? YOU can become a lender. Through sites like Kiva and Microplace, microfinance has become as easy as clicking a button. Online lending means that you can give a small amount of money to make a big difference to someone living in poverty. And remember- this is just a loan. The repayment rate for microloans is 98%, which is better than commercial bank rates.

This is where I will do a shameless plug for Kiva. Kiva is the first "person to person" online microcredit program. Lenders are able to personally select receipients and follow their stories as they progress. If you want to get involved, please accept my invitation to join the effort to encourage sustainable development throughout the world and move individuals out of poverty.

"It is more blessed to give than to receive." Acts 20:35