Friday, April 20, 2007

Micro Loans = Macro Improvement

Earlier this month I read Nicholas D. Kristof's column via the New York Times News Service entitled, "Internet Allows You to Help World's Poor", where he explains how he became a "micro-credit lender" via this videotape:

Micro-credit is the concept where small loans (as low as US$25.00 in many cases) are made to entrepreneurs in developing nations versus "macro solutions" such as the World Bank financing the construction of a hydro electric dam in some poor country. The micro-credit concept was developed and made famous by Muhammad Yunus at the Grameen Bank in Bangladesh (for more on Mr. Yunus please see my earlier posting:

Mr. Kristof's column provides a wonderful overview of how micro-credit works and why it is essential for reducting poverty levels. His column focuses on his personal experience using a micro-credit clearinghouse website known as "Kiva" which was founded by Matthew and Jessica Flannery. You can find Kiva at:

Before reading Mr. Kristof's column I knew the history of the Grameen bank and understand the concept and need for micro-credit but I really had no knowledge of how to get involved personally until I read about Kiva. So following in Mr. Kristof's foot steps (who lent $75.00 to three companies in Afghanistan (2) and the Dominican Republic (1) I too became a micro-credit lender. The two companies I "invested" (essentially an interest free loan with no equity position but the loan has a VERY high probability of being paid back due to peer pressure, local pride, and the due diligence completed by the aid agencies who partner with Kiva) are based in Honduras and Kenya.

I look forward to watching the entrepreneurs I am supporting progress with their business plans (Kiva provides email updates if you opt in for that service) so that I can be re-paid which will allow me to invest in other enterprises. Imagine how we could better the lives of the world's poorest people simply by converting current foreign aid budgets into micro-credit lending. The first step in doing so would be the elimination of personal income taxes in the USA thus allowing individuals to have more money left in our pockets so we can decide to give to a service like Kiva instead of having this money essentially stolen from us to feed the big government foreign policy establishment.

Reform brings results,


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