Alternative lending

| 03/04/2010

Recently, the International Monetary Fund (IMF) stated that governments should get tough with banks. The irony of this was not lost on me. The situation in the world is that money is often loaned to countries by the IMF and organizations such as USAID. However, these loans come with many strings attached which cancel out any benefits for ordinary people.

They are often for huge infrasctructure projects, and those projects are undertaken by multi-national corporations which reap the majority of the benefits. The rest is often lost to government corruption, leaving most people exactly where they started.

There is an alternative to this backward practice of giving with one hand and taking away with the other. An organization was begun in San Francisco called KIVA and I would like to tell you something about it.

Many people have heard of micro-financing and micro-banking. Micro-banking involves creating a community bank. Micro-financing involves a process that is similar: People make personal loans to individuals. By going to this website, you can choose someone anywhere in the world you wish to make a personal loan to. The payback record on the loans is 89%. (Far better than Wall Street, is it not, and the "loans" they received from you and me?) There is, of course, a small administration fee involving the people working for KIVA throughout the world. How does $3.25 US sound?

The loans are small, accumulated from several individuals. Often people are not able to access standard banks. They haven’t any collateral other than the work they are willing to put in to better their lives. Therefore, banks aren’t interested. But if they could seize a life they would.

For myself, I have made a loan to woman in Nicaragua, who needs to repair her house. And another to someone in El Salvador who has a small restaurant. The loans are being re-paid.

What you receive is a statement on repayment and the progress of the person you are helping. There is no interest on these loans, which are sometimes as small as US$25 or $50 and you are free to contact the person. There is also the option on being repaid of rolling it over to someone somewhere else.

I believe firmly this is how we make the change we want to see in the world.

Upon visiting the website you can read their stories and see who the person is you would like to help. These are people just like you and me, albeit with fewer advantages. Not a Rolex or a mega-yacht in sight. Just … people trying to better their lives with a little help.

If you are actually, like I was, really tired, infinitely tired, of hearing the same BS from the same people, please take the time to check it out. You can even form a group if you’d like of friends or co-workers. Form your own conglomerate! Within your online portfolio of loans, you will be kept updated on repayments and progress. As I said, the repayments are running at 89%. These aren’t people like AIG looking for a hand-out. All they want is some help — and they’re willing to pay it back.

Wendy recently wrote a viewpoint about Individualism over collectivism. I strongly concour that, by acting individually, collectively we can change the situation many people in the world are living in.

The IMF and banks impoverish people. Loans are made which can never be repaid by their governments, and in the process people lose their resources, property, employment and self-determination. They become serfs without any degree of hope for improving their lives. With micro-financing we are able to cut-out the middlemen. And when we become the bank … we are then the bankers. But with a difference. With compassion. This is what Jesus would have done, no? By making personal loans we have helped in our way to cut-out the greed and avarice. And sleep knowing we’ve actually helped an individual escape poverty. We really have.

Don’t take my word for it. Investigate micro-financing. It is worldwide and growing. By helping someone else win, we win too. Go to the KIVA website and read their policy and the success stories — small loans that have changed peoples’ lives. You will then begin to realize something: we no longer have to depend on banks or the IMF and the costs they extract at the expense of so many decent people.

We’ve re-invented banking.

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  1. Anonymous says:

    Thanks Joe for that run-down…

    To depend on world banks like IMF and USAID, is a dangerous practice.

    To all Caymanian Politicians BEWARE –

    This is how leaders of governments are brought into serious situations with world banks, lenders, and people who don’t mean them and the country they are from, well.

    Let me remind you of the EHM.  For those who don’t know what an EHM is,John Perkins, American Economists, best explains it:

    "Economic hit men (EHMs) are highly-paid professionals who cheat countries around the globe out of trillions of dollars… They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization." – Confessions of an Economic Hitman

    Here is a rundown of their agenda:
    1. Recruit persons through the United States National Security Agency (a secret agency that is part of the U.S. Department of Defence), and covertly place such persons in key areas on a payroll at international consulting firms (private consulting companies), engineering firms, and/or construction companies, so that if caught, there would be no connection with the U.S. government.
    2. Target underdeveloped countries (saddled with debts). A rule they love to follow:  The smaller the wealth gap, the less uncrippled wealth.
    3. Convince the political and financial leadership of countries saddled with debts to accept enormous development loans from institutions like the World Bank and USAID. Loans like schools, roads, hospitals, et cetera…
    4. Have the recruited persons funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign "aid" organizations into the coffers of huge corporations and the pockets of certain wealthy families.

    5. Meanwhile, have some kind of control over the politicians fo these countries. Ensure laws are legislated in harmony with the economic loan plan.
    6. Have the government recruit, use such tools as fraudulent financial reports, rigged elections, make payoffs, extort, seduce leaders, and if all else fail, arrange for murders or assasinations to take place.
    7. When the economic hitman fails to meet his goals, "they" call in the "jackals," secret hit-men to assissinate leaders of the country, or arrange for the U.S. government or an allie of the U.S. to declare war on the country. Sanctions are imposed OR declaration of war.
    Sounds like a conspiracy theory, doesn’t it?  This is the same thing when we speak about the "special interests" in the UK.
    REAL STUFF, FOLKS!  I encourage you to read the book, "Hoodwinked."
    Also, to me, I was wary of the contract the PPM cut with Tom Jones to build our new schools. Why cut one big long-term contract with the overseas company? That is what I don’t understand. We got ourselves in an agreement – and then we have to pay this man!  Not saying Tom Jones is in with Economic Hitman agenda… lol… that would be assuming too much.
    But… folks, let us think realistic. The UK and the United States of America and other superpowers, are really being controlled by Corporations. The outcomes of U.S. elections are from the monies poured in by Corporations and big businesses.  We are such a small Island, we can not make foreignors – much more our own English, fool us. As human beings we need to understand that we live in a world of greed where you have people in high places that would do anything to swindle or trick us to sell our own birthright.
    I pray that our politicians, especially, the Premier McKeeva Bush are aware of all such kind of tactics that would deprive us as a people. 
  2. whodatis says:

    Thanks for this Joe.

    I will most definitely look into KIVA.

    Nice to learn of an actual and feasible alternative to the current "s*itstem".


  3. Anonymous says:

    KIVA was actually started by a former colleague of mine, Mr. Premal Shah. This gentleman is an amazing person, and has lived a pretty amazing life. The neatest thing about him is that even though he has made his money (PayPal), he is still out helping others using is genius.  

    It says a lot about a person who is helping others.

  4. what a mess says:

    Thanks for this great post! I’d never heard of Kiva before but will surely be joning. It lifted my spirits to read this, and i’m sure joining will do so even more.

  5. RufusBSaye says:

    Just thought I’d add positive reinforcement to an already great piece…

    From Wikipedia, the free encyclopedia

    A tithe (from old English teogoþa 
    "tenth") is a one-tenth part of something, paid as a (usually) voluntary
    contribution or as a tax or levy, usually to support a religious
    organization. Today, tithes (or tithing) are normally voluntary
    and paid in cash, cheques, or stocks,
    whereas historically tithes could be paid in kind, such as agricultural

     THOUGHT: Those of you not already contributing (or, in addition to [or maybe instead of] ) to a local church might want to consider the type of micro-financing in this comment piece as a form of charitable donation that keeps on giving, especially if you elect to roll over the old loans into new.

    Think about it: Most charitable donating resembles pouring water into a bucket with a hole in the bottom… the need to replenish is always there. While there is a definite need for this type of giving (please don’t stop!), the micro-finance model is definitely closer to the "hand up instead of a hand-out" model…


  6. Jane Average (no relation) says:

    Dear Joe,

    Thank you for a great article. I have been a Kiva member for years and keep rolling over my original donation and have been able to help many people throughout the world. I have also donated a small amount to Little Feet, Big Wheels that formed right here in Cayman, which has helped kids get bicycles so they could attend school in Vietnam. (I meant Vietnamese kids by the way!)

    Probably not feasible on a larger scale but I needed a loan recently so instead of going to a bank and hoping for their approval, I went to family and will now give them the interest (and It’s smaller than the Bank would have charged but bigger than they could get in a savings account).

    I also help out locally, I know this is a concern from some that we should focus soley on our own backyard. I help wherever I can, whenever I see a need or an opportunity, whether it’s here or there. I’m not nationalistic, although I do love Cayman, I’m more "planeterastic." I believe that everyone on the planet should have a home, food and clean water and that there is no reason why we can’t make this happen. This will give us much more safety and security than any guns could, plus it feels so good to give.

    On this holiest of days for Christians and whatever day you hold sacred, think about how you can help someone else and do it.

    peace and love.

  7. Anonymous says:

    I’m very happy to see this veiwpoint. I use KIVA all the time. It makes for a great birthday or Christmas gift to send a friend/family member a "giftcard" from KIVA so they can choose to help people/programs that speak to them. For example, my step-mother prefers to give loans to programs promoting female rights and education, my father likes to make his loans go to small entrepreneurs and I make most of my loans to organisations promoting youth sports in impoverished areas. Thus far, the vast majority of my loans have been fully repaid, or are in the process of being repaid (and no missed payments from anyone yet)! I’ve then gone on to reloan the money to other people so I can feel as though I am positively impacting more lives with each click of my mouse. I think that as equally heart-warming as reading the success stories from KIVA is when you make a contribution to a loan, and see how many other people have also contributed towards a good cause. It’s amazing to realise what a difference a small gesture by a large number of people can make.

    Again, great to see this viewpoint and I fully encourage others to participate with KIVA to make a big difference in someone’s life.