Microloans for entrepreneurs in developing countries, loans that change lives | Hacker News Reader

Microloans for entrepreneurs in developing countries, loans that change lives

kiva.org

6 pointsrms10 comments

http://en.wikipedia.org/wiki/Microcredit is a good overview. It amazes me that this doesn't get more coverage, especially after the Nobel.

One of many interesting details is that women get the majority of the loans because they're usually far better credit risks.

Sadly, microcredit is nowhere near profitable. Yunus et. al. are heavily government-subsidized. And the reason most of the loans go to women is that Yunus has a really bizarre feminist agenda. Microcredit is maybe a good way to run a charity, but it's not a business.

http://www.mises.org/journals/fm/Dec06.pdf

IMHO the article in the PDF is highly biased, like for example when it takes the "Sixteen Decisions" completely out of context. The article also makes a number of claims without mentioning any sources at all. The only piece of reference provided is the infamous 2001 WSJ article, which was already extensively debunked way before the Nobel Prize.

There is no feminist agenda. Grameen lands mostly to women based on their own experience showing that: 1) Women are more likely to pay the loan back; and 2) Women tend to invest the loan in long-term basis (ex: buying a cow to sell milk). The fact is that women are highly marginalized in developing countries, and men magically starts to listen to them when they somehow are able to make decisions without the men's approval. Women have a vested interest in the loan, and therefore they tend to be better payers.

Don't believe on such "experts" -- If their theories were right, developing countries would be prosper by now :)

The Mises article is incorrect. Grameen Bank's website (http://www.grameen-info.org/bank/) contains audited financial statements. The Grameen Bank broke even in 1984, hovered around the break-even point until 1993, and has made steady profits since then. It made approximately $15M on revenues of $112M in 2005.

That's not particularly impressive from a financial standpoint, but it's certainly not a charity. It's more than most Web 2.0 startups make, after all.

Turns out microcredit banks need hackers! There is a huge cost involved in keeping track of all those tiny loans manually, and thus they need inexpensive and effective technology to manage their operations.

Mifos is an open-source microcredit banking system, and they need volunteers: http://www.grameenfoundation.org/what_we_do/technology_programs/mifos_initiative/

Frontline (PBS) did a feature on Kiva which was rebroadcast here a few days ago; you can read about it here: http://www.pbs.org/frontlineworld/blog/2006/12/a_little_goes_a.html and see the video here: http://www.pbs.org/frontlineworld/stories/uganda601/video_index.html

Browsing the current and previous loans is truly fascinating. I like how there is a story behind every loan.

Here's a good one. http://www.kiva.org/app.php?page=businesses&action=about&id=408

In theory this seems great, but how does it really work? I mean what is preventing people from just making up businesses, taking the money and vanishing into the jungle forever?

When an individual gets a loan, the village itself is sort of "co-signing" it. If the person defaults or runs away, the entire village's "credit score" is affected.

This is not theory: Millions of loans were granted worldwide, and in fact the default rate is actually lower than traditional banks in developed countries.

Note: My comments above are about microcredit in general, and not specifically about Kiva (which I don't know much about it)

HELLO MY NAME IS SUE FROM NIGERIA. My FATHER left ME a LOAN with KIVA. HE ALSO GAVE ME THIS GODAWFUL NAME. PLEASE HELP.

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