Friday, May 11, 2007

On Line Social Money Lending Networks

Ever since Muhammad Yunus was awarded the Nobel Peace Prize for proving the fiscal viability of lending money to the poor, are the on line counterparts just as effective?


By: Vanessa Uy


My grandfather’s present financially secure status was due to some big-hearted soul who took a chance by lending him some money as capital for a business start-up. This is just one of the success stories/testimonials that extol the virtues of money lending. But more often than not: Does it help more than it hurts? When Mohamad Yunus was awarded the Nobel Peace Prize last year for his “Banking for the Poor” program. Many of the urban poor in the slums of Bangladesh were very grateful for receiving the much needed start-up money / small business loan, thus getting them out of “the red.”

On the web, you can do your own DIY banking with the help of “Zopa.com.” This is one of the pioneering on line money lending sites, which started operating in England that lends money that is payable on the client’s own terms. A myriad of testimonials on Zopa’s website already professed that they benefited Zopa’s easy to pay terms. Since then, Zopa probably served as a vital lifeline to the majority of England’s “blue collar” population. Despite the risks of phishing, ID theft, and the proliferation of illegal key logging software that continually compromises on line security or just due to the relative lawlessness of the world wide web. “Zopa.com” still manages to provide material gains to their investors while offering a helping hand to those in need of extra cash. James Alexander CEO of Zopa says that his company has enough safeguards to minimize the risks.

If you want to help someone in a poor country to start his or her own enterprise, you should check out Kiva. Kiva is an on line social money lending site that allows you to sponsor an entrepreneur from a third-world country for as little as US$25. What I liked very much about Kiva is that they have a very good “transparency factor.” Thousands of charity cases, which have passed Kiva’s evaluation, are listed on their website. The short video clips contain individual business proposals. If you choose to invest, the maturation period of the loans are usually 6 to 12 months. And you, the investor are contacted via e-mail on your investment’s progress. One of Kiva’s success stories is Angel, a bicycle repairman from Rome, Bulgaria. Angel got booted out of the local bicycle repair shop in which he was previously employed due to “financial restructuring.” With Kiva’s helping hand, Angel now runs his own bicycle repair shop. With additional investments, you can help him expand his business and help to lessen the unemployment problem of his hometown.

2 comments:

Sarah said...

Working as a nurse in London, I'm constantly need money to maintain the lifestyle that I've grown accustomed to so the on-line "tips to reduce debt" adverts is the last thing I need. I wish the concept of "cash advance" could be much simpler but a steady job is no guarantee against bankruptcy. Then I discovered Zopa's on line banking system while surfing the web for "credit counseling." Zopa offers the cheapest interest rates - as far as I know - if you want to borrow money on line or apply for an e-loan. Six months later, my financial problems are virtually gone but I've learned my lesson to be more careful with my money. I even invested the extra cash I manage to save to Zopa and now I have an "emergency fund" worth US$3,000.
Three months ago, I've visited Kiva's website and the concept of socially responsible investing just made my "emergency fund" / "extra money" reserves very interested. Maybe it's my turn now to invest back to the "socially responsible" side of on line banking system to provide badly needed business credit or loans to Kiva's "needy" clients like business start ups in Eastern Europe and Africa.

Michelle said...

Have you seen the DW-TV documentary about how Professor Muhammad Yunus founder of Grameen Bank whose idea of banking for the poor has gone global? Yunus' Grameen Bank concept that started in Bangladesh, is now copied around the world. Currently, there are 10,000 microfinance / microcredit / microlending operations globally. Banco Pro Credit of Ecuador is one of the more notable of these operations. Banco Pro Credit's main office is located in Frankfurt, Germany by the way. The way Banco Pro Credit operate their microcredit programs is so equitadle that even sidewalk fruit vendors can apply loans for business expansion has improved the conditions of small enterpreneurs throughout Ecuador. Another "banking for the poor" provider-India's ICICI also brought the concept of Muhammad Yunus to the small-scale urban enterpreneurs throughout India who on average earns between 1 to 2 US dollars a day during their good days. Micro credits raison d'ĂȘtre is that it provides a stable yield despite of a relatively low return of investment rate to the "bank." One of the recent participants of the microfinance game is Credite Suisse. They established their microfinance program as a part of their socially-responsible investment practices program. I hope that other major financial institutions will follow suit to help those who are living on a dollar-a day or less which by the way means half of the world's population.