What is Microfinance?

[Michaelangelica]

Moderators could we please start breaking this segment/forum down to economics, sociology, psychology,economics, anthropology etc etc?

 

Microfinance Gateway: What is Microfinance?

 

I have read and seen a little on this and it sounds fantastic. Not just for developing nations but enabling developed nations to give practical, non-sectarian, help.

EG

The Original Banker to the Poor: Muhammad Yunus

 

We're sure you've probably heard of Kiva (if only because we can't stop raving about it), and now that Natalie Portman's put her pretty face behind the cause, microfinance seems to be the latest buzzword for business-minded philanthropists everywhere.

But if you want to know how this trend got started, you'll have to look beyond Kiva and its counterparts, all the way back to Bangladesh in 1974, where a young economics professor named Muhammad Yunus served as the world's first banker to the poor.

 

"One thing that led me to what I do now was a woman making bamboo stool. She told me she made two pennies a day. I couldn't believe why she made two pennies a day. She made beautiful bamboo stools," Yunus told CNN.

 

The woman told him that the rest of the money she earned went to a loan shark, who'd set her up with initial funding for her business, but forced her to pay it back at ridiculously high interest rates, sending her further and further into debt. Borrowing money legitimately through banks at a reasonable interest rate was not an option – because she was low-income, banks saw her as a financial risk, and refused to meet with her.

 

Yunus was appalled by the fact that she and other women in her impoverished village, Junta, were unable to make ends meet. He knew they only needed small loans to help them become financially independent. He began wandering around the village marketplace, talking to women who made and sold baskets, and asking them how large a loan they would need to get out of debt.

 

The total amount it would take for 42 poor basket weavers to get back on their feet? A mere $27 from Yunus' own pocket.

Click To Continue

[Tormod]

Moderators could we please start breaking this segment/forum down to economics, sociology, psychology,economics, anthropology etc etc?

 

Good idea. I recommend going to the Bug Tracker (see my signature) and reporting this as a suggestion! :hihi:

[nutronjon]

Bank of America began in California as the Bank of Itally. It was begun an Itallian, A. P. Giannini. He got into the banking business for the very same reason micobanking was started, only this was San Francisco 1906. He had to fight the laws established by big bankers in order to provide small loans to poor people, and it was small, poor people who caused this bank to grow to and become larger than banks in New York and London.

 

I think the subject of economics is important enough for its own forum, separate from all the rest. This subject is as hot as religion, only our lack of knowledge prevents us from discussing economics as much as we discuss religion. This knowledge is vital to political decisions and the Republicans candidate, McCain, announced he knows nothing about economics. That shows you how well informed his voters are. As long as this subject is lost in all others, there is little chance it will become as popular of religion, but it should be.

[Moontanman]

Hmmm, the amount of money I have to live on?

[Michaelangelica]

Hmmm, the amount of money I have to live on?

You do get your money back; so it only costs you the lousy bit of interest the bank gives you. (or the CC debt)

This KIVA site seems is a possibility, even for me. Perhaps a suggested Christmas present from the kids.

(Although I might wait till the Oz $ recovers from its 30% drop against the US $)

 

It looks good. It breaks down the bigger loans into $25. amounts.

I wonder if anyone, here, has any personal experiences of it?

I think you can donate on behalf of Atheists or Christians too !

(I often worry that my Aid donations will go to support Evangelists.)

Kiva - About Microfinance

Kiva - What Is Kiva?

 

It is a pity that there seems to be no microfinace in Developed countries like Australia. I am sure there are many out-back aboriginal and other people who could use this sort of help.

Here is high praise from Forbes no less!

 

When Small Loans Make A Big Difference

Knowledge@Wharton 06.03.08, 4:00 PM ET

Media Billionaires

The Forbes 400

 

 

 

Nearly everyone told Matt and Jessica Flannery that their idea--a Web site where people could make micro loans to individual borrowers in the developing world--wouldn't work.

 

Venture capitalists couldn't see how anyone could make big money on loans as small as a few hundred dollars. And foundations, for their part, wouldn't support something that they saw as commerce, not charity. "We were in this weird social entrepreneurship space, trying to fight perceptions," Matt Flannery recalled.

 

One lawyer friend even told Flannery the Web site would be illegal. "He said, 'You can't just send money to someone in Uganda and have [him or her] send it back and have it be OK. If you do that, someone's going to care. Someone's going to show up at your door,'" Flannery said. "I read all the policy and case law on it, and I couldn't find anything that said it was illegal. So we just started doing it."

 

That decision proved prescient. Today, the Web site the Flannerys created-- Kiva.org--is one of the hottest and hippest on the Web. One online commentator compared it to an online dating service, and even former U.S. president Bill Clinton has praised its virtues. Kiva's 270,000 lenders--people who typically hand over their money, via credit card, in $25 increments--have funded borrowers in places as far flung as Tanzania and Tajikistan.

So far, they have assisted about 40,000 borrowers in 40 countries and provided a total of about $27 million in funding.

A wave of international attention came to the practice of micro lending when Muhammad Yunus and his Grameen Bank won the 2006 Nobel Peace Prize for pioneering work in the field.

More here

When Small Loans Make A Big Difference - Forbes.com

Another article here:

Global Business