Posted by: Sam Carson | 25 October, 2007

Microfinance for the people by the people

The internet continues to develop clever little experiments. eBay has just started up a site called MicroPlace.com where US citizens can go online and fund their own microfinance project.

What?

Think of it as an aid foster child programme, but instead of a child you get a business, and instead of a photo and crayon scribbled letter, you get investment returns. Wired has a report:

The site is notable for two reasons: it’s not only owned by eBay but it’s also the first microfinance site to allow everyday folks to earn interest on their investment. Interestingly, eBay plans to donate all profits from MicroPlace to various non-profits, including (but not limited to) its own eBay Foundation.

The BBC also has a report that features MicroPlace’s founder and general manager:

The investments last between two and four years and offer a small return.

“We really wanted to make it accessible for small everyday investors,” said Tracey Pettengill Turner, the founder and general manager of MicroPlace.

“You can earn a return on your investment and help the world’s working poor,” she said.

Wired explains how it works:

At its launch, MicroPlace offers a limited array of securities, which allow individuals to invest in specific funds in specific countries at an interest rate of between 1 and 3%. Interest rates will vary and may be higher in the future, depending on the desires of each fund. Non-profit Kiva.org, by contrast, offers loans directly to the working poor, but doesn’t offer interest. (Full disclosure: I have loaned money to several third-world entrepreneurs through Kiva.)

Along with quarterly interest payments, users will get updates on the individual entrepreneurs each fund is assisting. Turner herself recalls meeting a weaver in Bangladesh whose loan had financed a loom. Within a year, sales of her fabric had paid back the loan, built her a house, and sent her kids to school. “You hear stories like that and it just gets in your blood,” says Turner.

The MicroPlace website has a great backgrounder section on how MicroFinance works, and is worth a read.  Worldchanging gives more background information on how MicroPlace works and links. 

You won’t make billions, but you might make a difference.

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