Saturday, May 14, 2011

A day in the life: microfinance

While I thoroughly enjoy the more hands-on, humanitarian work, I'm a bean-counter. That's the main reason that I'm here. I count beans.

Nonetheless, I do try to have an impact in other ways. One of the things that's fascinated me for a while is microfinance. So when I arrived, that was one of the topics I kept asking about. Does it work? Can we do it?

Unfortunately, while there are some great organizations, such as Kiva and Oxfam, it's a very difficult form of aid to both:

1) provide in a needs-based manner; and
2) properly track and review performance.

Heck, it's difficult to do this in the USA where most of our financial transactions are automated. But much of the world -- particularly where a $25 microloan has a great impact -- has virtually nonexistent automated financial services. And although that's rapidly changing due to improvements in technology, such as cellphone banking, it's still a major hurdle to microloans for many.

Nonetheless, on Friday I was fortunate to help this lady and her daughter in a small way. More specifically, her benefactor in the US helped her with some money to start / expand a business... and also helped a young man with repairs to his motorbike that he uses as a taxi service here in town. And while I'm not getting into the details, I will followup to ensure that the money was spent on the reason for which it was granted.

Again, I'm not getting into great detail on this. And it was a gift, not a loan. But that's the reality of microfinance. While it can work well, it's so incredibly time-consuming... at times it's simpler to offer a gift, then simply followup to make sure the money is getting used properly... rather than reviewing financial records and requiring reimbursement.

From my perspective, the key issue is ensuring the money is used properly and to better someone for a lifetime.

For more on microfinance, see here.

And here's a picture of the mother and daughter who intend to start / expand the family business with some newfound financing:

Tim White

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