Multiply your Personal Impact with Micro-lending
Since I have been mostly successful in my life, I try to provide opportunity for others to have similar success. My favorite way to make an impact is through micro-lending.
What is micro-lending?
In many developing countries, the only lending options available to farmers and small business were usurious loans through private lenders. A farmer might borrow $100 at the beginning of the growing season for seeds and fertilizer, and then have to repay $150 or even $200 at the end of harvest a few months later. Try earning enough to feed your family and build a little capital stock with such usurious rates!
Micro-lending agencies would provide small loans to farmers, but have much more reasonable repayment terms. Because the micro-lending groups are structured as non-profits, they don't have to charge usurious terms to enrich their investors, they just have to earn enough to cover expenses, so the interest rates are just high enough to encourage prompt repayment. With reasonable repayment terms (and sometimes social pressures for repayment), micro-lending groups resulted in much lower default rates, and much more benefit to their borrowers.
But if they don't provide a financial return, where do the micro-lending groups get the money to lend out? Enter Kiva.
What is Kiva?
Kiva (personal referral url) partners with the local micro-lending agencies in different countries. After the local agencies extend micro-loans to borrowers, they list those individual loans on Kiva's platform. Kiva chops the loan up in bite-size $25 pieces and individuals around the world can fund the loans. Any loan that is fully funded collects the money from Kiva, which allows them to support even more borrowers. Then as they collect payments from the borrower, they pass that back to Kiva, and it goes back to the individuals that funded the loans.
I use Kiva to magnify my impact. Every couple of weeks I log in, put a handful of loans in my basket, and check out using Paypal. As the loans are repaid, I can cycle the money back into more loans. If a loan defaults, it was money I wanted to give away anyway, it just limits my ability to keep cycling it into more micro-lending.
Personal impact - magnified
So here is the amount that I have outstanding in Kiva loans. That's a nice bit of impact... there are people all over the world benefiting from it.
But as loans get repaid, I cycle into more loans. So here is the personal impact magnified:
That tiny $2000 has actually supported over $20000 in micro-loans! And it will keep cycling through and support tens of thousands more. Isn't that amazing? Over 800 borrowers have benefited from putting in a little money every week or month, money I can afford to lose, and then cycling it over and over again as it gets repaid.
All images in the post were sourced from www.kiva.org. I do not benefit from you using my referral link, but it allows me to track whether anyone signs up from this post!
Cool as heck @josephsavage! Amazing concept, thank you for bringing it to light. How cool would it be to be able to lend steem/steemdollars to people across the globe creating our own internal bank economic ecosystem? My answer: uber (exciting). I wanted to thank you for your support on my SBI membership contest. It's greatly appreciated, pretty quickly we will have another new name in the circle!
Ooh, I like this idea. I wonder what it would take to setup something like Kiva that takes crypto.
Having talked with you briefly last night, I gave it some thought. First of all, had you not said anything, I would not have. If you think it could worthwhile, I would take that as being on the safe side of calling something "a germ of a potentially good idea." Clearly you're busy as heck, I am just passing this your way to hear thoughts more than anything else, so here it goes...
--Set up a network from Steemit bullion producers to produce fractional amounts of gold/silver/copper (whatever) bars that are purchased with steem/sbd. That is used to pay interest on the initial investor that loans steem/sbd to fund a loan for land development/purchase and/or seeds other farming supplies that would be needed to get the sustainable worker of the land to work at full capacity. So should the farmer wish to lease land that they own, or sell it, the steem/sbd balance for loan would be available to lend out. Also, if bought on a quantity basis the payment to the landlord could also be made in silver/gold/whatever to aid in the facilitation of a less abusive situation that person may face in their country due to the current financial crisis being experienced. There would have to be some type of way to find these people accountable to what they are borrowing to avoid as much corruption like what Kiva does. Heck if they could do something like this it would be very cool. There is likely a reason they do not already if aren't already but I guess it doesn't hurt on my part to mention the possibility that is there for them. Your micro loaned amounts have accrued little interest, which could also be churned back into a similar project, making it more charitable based. This of course would have to be done by volunteers but to make a long story short the donor of the object of value could either receive a dividend in just about anything but typical currency, and by having those of us who are feeling generous can donate, and those that are happy to lend at small returns on the plus or minus side over time could possibly that as well. The non-profit angle is a possibility if done as a pure charitable contribution, going the 501c3 (USA tax code) angle.
I'm not sure how the connection to gold/silver/copper comes in. I know that Kiva partners with local micro-lenders as a backup source of capital. The local lenders use nominal interest rates to encourage repayment and cover their operating budgets as non-profits. The Kiva lenders (me) do not earn any interest on their Kiva loans.
It sounds like you are trying to setup a funnel where the money from the supporters buys something of value, and the income is split between supporting micro-loans and providing a nominal return to the lenders. (Similar to how sponsoring somebody into @steembasicincome gets you one share and gets them 1 share for each STEEM submitted.)
That could potentially work, but you would need to consider whether the added complexity adds any real value.
Ha, ha yeah or I could just set an account on Kiva. I get it, good point @josephsavage.
We can start a "seeds for content" social activist online initiative.
I'm already running two other programs on Steem, but if somebody does this I would be happy to lend some support.
That's awesome you've been able to support so many people. I tried doing Kiva years ago. I thought it sounded like a good idea, so I asked for $50 for my birthday to lend.
I chose two different loans in different regions. One of the loans was late being paid back. When it was paid back, it was not quite the amount I loaned. The other loan defaulted and was never repaid.
That was my experience. Hopefully you've had better luck with it than I have!
I have quite a few loans that are late, but very few that have actually defaulted. I only do group loans. The micro-lender organizes groups of people that know each other, and the group has loans issued to separate members on a round-robin basis. The social cohesion of the group decreases the default rates.
I also choose loans with shorter payback periods so that I can cycle through more, and I think that's why my delinquency rate is so high. The lenders can choose to restructure the terms to prevent default. Giving the borrower more time is usually enough to ensure that they eventually repay.
Whoa! This is really nice, does it extend to Africa to be precise Nigeria?
I just checked and there are not currently any micro-loans available to support borrowers in Nigeria. Most of my loans go to Africa. It's possible they just don't have a local partner in Nigeria right now.
If you were asking whether people in Nigeria can support micro-lending through it, I'm not sure. They use Paypal for all their payment processing, so I would think that if you can get Paypal you can support people through it.
Here are the countries I have lent to. The bulk of the borrowers that I have supported are in Rwanda and Congo (DRC).
OK sir, PayPal isn't fully allowed in Nigeria either, anyways thanks for this, it's a great initiative just sad that we aren't able to take advantage of it.
Here's the first line from the Wikipedia entry on Usury in English:
You say
It's interesting (no pun intended) that the modern usage of the term now takes for granted the fact of interest but focuses on the fairness of the rate, as you do.
It's worth remembering that opposition to usury (in the classical meaning) was the foundation of many movements and popular uprisings.
I'm not saying that it's not a good service or that I oppose interest loans, just seeing that word reminded me of this historical fact.
That's a good point. I am familiar with the classical definitions. I believe that in orderly markets, usurious rates can only happen through abuse of power. In many developing countries the market structures have not developed sufficiently for non-usurious market rates to arise (because of corruption, historical abuses, etc.) It's in these countries where I think micro-lending has the most to offer.
It certainly seems that way. Thanks for bringing this up.
This is so dope to see. If i have enough money to support myself and my family i will definitely start using this! Thanks for the post @josephsavage
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You will recover faster if you create quality content than you will by begging for help to recover.
Good morning
Congratulation my friend Nice sharing
Keep it up...
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