Anyone hear Jeremy Vine talking about micro economics today?

[ThePosieParker]

It was a way of loaning people money in places like Malawi and Ghana, the people loaned to were women and groups of women. I thought it was interesting that women are trusted more.

Anyone know anymore about it?

[foreverwino]

Heard this too. Micro finance is a good idea (not to be confused with microeconomics).

[ThePosieParker]

Sorry.....no he really wasn't discussing microeconomics!!

[AliceWyrld]

I have heard stuff before about investing in women. Something to do with how if you invest in women, more goes the community at large, whereas in you invest in men it tends to just benefit the individual. To do with how society is set up, not some genetic trait. But I didn't hear Jeremy Vine, as that would make me throw things.

[ThePosieParker]

I do like a bit of Jeremy vine, I am a glutton for punishment!! And it was incredible, small loans with a 96% repayment rate. These are business loans which in turn employ people and get reinvested in the community. what is it that makes a woman more likely to invest in her community over a man?

[AyeRobot]

I've heard good things about Kiva

[claig]

'what is it that makes a woman more likely to invest in her community over a man?'

I think it is nature. Pregnancy and giving birth gives a closer link to the future, the community and nature. That's why women are in general more responsible and less likely to blow money on beer or gambling or financial speculation.

[kayah]

In 2006 Muhammad Yunus won Nobel Prize for introducing this concept

news.nationalgeographic.com/news/2006/10/061013-nobel-peace.html

[ComradeJing]

I'm a fairly regular user of Kiva and I think it is brilliant.

In a nutshell you loan your money to kiva who loan it to a local microfinance organisation who loan it to an individual or group. Repayments are then made in reverse. So the $100 that I loan in the beginning I've loaned back out about 6 times again. As it's all run by volunteers I'm pleased it's not going to pay the sometimes very large salaries of charity bosses.

I tend to give to women more than men as I hope/imagine that money given to a woman is more likely to benefit the family. I hope it also makes a woman more likely to leave an abusive relationship because she is self sufficient.

Kayah I saw an Oprah show with Muhammad Yunus. Absolutely amazing man.

[kayah]

I should read more about it.

I am realy unhappy that wannabes have more coverage in the press etc than the man like himself - he did make difference to this world :)

[Beachcomber]

DH read a book that was either written by Muhammad Yunus or written about him, sorry can't remember which. Amazing man.

Sounds like a great concept though - investing in women with microloans. I will look into becoming a lender, thanks for the link to Kiva.

[kickassangel]

that comment about ending poverty prevents war is sooo true. trying to rack my brains, but remember some comic saying that wars/revolts start where there's the greatest poverty, people who are fed and entertained aren't as keen to start a war.

[TheBossofMe]

Ooh, missed this, will have to find it online somewhere

I did my masters thesis on micro finance in the Caribbean and Indian subcontinent, and it's impact on women's lives, and am involved with a micro finance organisation ATM, love it.

Has taken a lot of criticism recently about lack of due diligence in checking whether people already have a loan or two to pay back. Ime, well run, mf orgs can transform women's lives

[BrandyAlexander]

I am a great believer in microfinance. I use kiva as well but it doesn't have very good coverage in Africa so use myc4 as well. Although they are both p2p microfinance websites they work in very different ways. Kiva ones are pre-funded whereas myc4 (mostly) isn't. Also myc4 is more of a business loan on which you charge interest. The borrower says the maximum interest they are prepared to pay and lender says what interest they are prepared to charge.
I believe that kiva doesn't do much in Africa because the default rate is v high but by charging interest the default rate is lower.

World vision (a charity I am a big supporter of) also do microfinancing but the problem is when your initial loan is repaid you don't have a say in when it is directed next.

95% of my loans tend to be to women as it tends to have a much bigger impact on their lives. I also notice that women tend to ask for smaller loans which they are likely to repay.

[ThePosieParker]

Apparently it could be more empowering and have more of a trickling affect than hand outs? Or perhaps Oxfam does great work in places that microfinance cannot reach?

[BrandyAlexander]

I think that's a really interesting question Lenin. I don't see the answer as one or the other but both are needed. In reality I have diverted some of the money I give to the oxfams into microfinance.

Women tend to be the ones responsible for the family in a lot of these communities. They are much more likely to work hard to keep the family going and so more likely that they won't waste the loans and try and make a success of the business. Eg for a woman in some of the countries, if her business fails it means she has no way of feeding her children so its a giant motivator. Men don't always take the responsibility for the child raising so if the business fails its still the womans problem. For that reason, I would rather loan to women. Also women tend to employ other women so it has a trickle effect. I wouldn't say it has more of a trickle effect than say an Oxfam project, which tends to help more people but in a different.

I see world vision, oxfam and others as meeting a different need. Putting aside their emergency work, they will traditionally do things like install clean running water in a village. That's great so it means less people die but it doesn't make them self sufficient. I think all three types of philanthropy are needed - emergency relief, helping the community (eg the water example) and then giving them the opportunity to be self sufficient. For this reason, I put 25% of my donations to emergency reliefs (I support medicin sans frontiere who are excellent on the emergency side), 25% to community (eg world vision for the community stuff) and 50% to microfinance.

[SardineQueen]

There is someone on here who knows a lot about all this, maybe she will come along.

I posted some things I had read in the paper about caution with microfinance, she said some things in response. I might see if I can find the artivcles and the trhead

[SardineQueen]

here is the article that I read about it

[claig]

Thanks for linking that article, SardineQueen. Very worrying. I would be interested in learning more from the other thread that you mentioned, if you find the link.

20-30% interest rates. How can small businesses earn enough to pay back interest rates like that? It makes you wonder if some fat cats are growing rich off the backs of the poor. We know that some of our charity bosses earn huge salaries and a lot of the money goes on "administration", but at least they aren't forcing poor people to come up with interest repayments of 20-30%.

[claig]

Also it seems that much of the money is not being used to start businesses, but is used just to get by, which means that 20-30% interest rate repayments will not be generated out of profits. The microfinance companies must be aware of this, but they still continue their advertising of helping small businesses.

[BrandyAlexander]

Claig, as "greedy" as the 20 to 30% interest rate looks, it is significantly lower than interest that the local banks will charge, if in fact they will give them the loan at all. There is a percentage of defaulters so some of the interest goes into that to recover costs and the better microfinance cos do a lot of due diligence which costs as well. Most loans are normally for expansion of the business so the interest is repaid out of the short term profits (the loans are normally for a 6-18 month period.

My view is that microfinancing isn't about helping "poor" people, that's what the Oxfams etc are there for, its about helping someone (usually a woman) who is savvy but happens to live in a developing country get a small business loan that they wouldn't otherwise be able to access, and if so at a very damaging rate. The savvy ones then give employment to others which is how the poor and less savvy are helped. I don't disagree with the article at all, as there are some very dodgy microfinance cos out there but also some very good ones.