MyC4 - Microcredit: It’s not Charity
Microcredit: It’s not Charity
You hear a lot of talk about the American economy, the European economy, the Asian economy, and perhaps not quite enough about the Global economy.
This suggests that a lot of people are missing out on the big picture. It’s not easy for this or that country to do well for itself when its neighbours are suffering.
For example, nobody ever talks about the simple fact that, if third world countries had more money, we’d be doing more business with them. They’d be buying from us and we’d be dealing with them.
The traditional mode of thinking is that poor countries can be beneficial to corporations, since you can find cheaper labour there, but let’s look at the real facts of the matter. Sub-Saharan Africa has very little in the way of a strong workforce. Thanks to the spread of famine and disease, there is a lot of sickness and premature death. If the poorest parts of Africa had more money, they’d be able to buy medicine, to have a stronger agricultural industry, and they’d be putting money back into other countries’ economies.
The idea that there has to be a top and a bottom to the Global economy is long outdated. We all need to stand together if we want to stand at all. It’s said that injustice anywhere is a threat to justice everywhere, well, poverty anywhere is, likewise, a threat to prosperity everywhere. Would America and the UK be in a recession right now if even if the poorest country on Earth could afford to buy their cars, food, medicine, and clothes? Most definitely not. Knowing that we’re all in it together, that international trade is the backbone of any economy, don’t you want to have some strong allies on your side?
Interestingly, it’s actually in light of this idea that “charity” has become something of a dirty word. When you think of charity, you think of giving a loaf of bread to a poor family, feeding them for a day, but giving them nothing that lasts. There’s this pessimistic idea out there that when you’re down that’s where you’ll stay. So we know that simply throwing money at the problem does not make it go away. Poverty doesn’t simply disappear with a few handouts.
So it’s no wonder that sites like MYC4.com are catching on.
If you haven’t heard of MYC4, the concept is pretty simple. Think of it like this; let’s say you live in the US or the UK, and you have a great idea for a small business. So what do you do?
- The first step is, of course, you draw up a business plan.
- Second, you look at your credit score, show your plan off to the banks and investors and see how much startup cash you can drum up.
- Third, you get started. You buy the materials, maybe rent out a small store front or start a website.
Now let’s say you have an equally great business idea, you know that this is your ticket to financial independence. But you live in a third world country. You’re struggling just to earn enough money to eat every day, and you know there isn’t a bank in the world that would give you a loan. What are your options?
Well, MYC4 is giving that third world entrepreneur the same opportunities you and I take for granted, simple as that.
Kiva vs MyC4
Now, I've already written a hub about Kiva, another fine organisation that does microlending. the difference is fairly simply - and twofold.
- Kiva is global, MyC4 supports Africa.
- Kiva doesn't earn you interest on your loan, MyC4 does.
Hmm... that point got me a little concerned. Why oh why, if I am giving money to be philanthropic, would I want to support MyC4? It's simple - and again two-fold.
- Many people WANT interest. When I tell people about kiva, over 50% of people say "what kind of interest do you get?". I hate that question because I don't like that mentality much, and also it means that's one person unlikely to contribute to Kiva.org. That's money that could go to god causes lost. Now I have MyC4 to recommend, it caters for those who simply don't want to give money, they want a return. And that's fine too.
- I have to admit, the naughtly little pixie in me loves MyC4 for one reason - GAZUMPING! MyC4 works like eBay and you bid on an auction to lend them the money, ir whatever part of it you want. Lowest interest rate wins. I love to spot a loan where the interest rate is really high, like 17% or 20%, that people who might be expected to behave better are offering to some poor farmer in Africa to buy new cows, and go in at a low rate of interest and have their offer rejected. I get a real kick out of it in fact. Lending money to poverty-stricken business people in Africa at a crippling rate of interest isn't charity, it's exploitation. And I can do something about it by undercutting the big interest rates and nicking their investments off them. And I do. But of course, I can afford to give money away, and so I don't need the interest. I'm rich aren't I? Actually I can afford it less than most, but affordability has never been a criteria in deciding whether to do something I believe in. Never.
Here's someone needing a loan
and here are some offers to "help" loan people money - at what I personally deem high interest (for an African)
The entrepreneurs who borrow through MYC4 are generally asking for fairly small loans, oftentimes just a few hundred dollars or less. Even a grander example, Phylis Waithira Munyiri, who sells timber to local companies and the government on a contractual basis, is asking for just €1,097 in order to buy more timber and plant trees on her farm.
These loans are made through multiple investors. Eleven investors could invest around one hundred Euros each and finance Munyiri’s expansion project. Twenty two could put in fifty euros each, or forty four could put in twenty five euros each. To us, we might make that much money in a week or two, and it pays our bills. Where Munyiri lives, it’s enough to change a person’s life.
So if I invest at 10% or 12%, that nasty high interest gets knocked out of the bidding war because this is one place where LOWEST bid wins!
A lot of charity sites simply amount to temporary help for permanent problems, and they offer little more than a way for fortunate people to feel less guilty about having been born in a developed country. MYC4 offers none of that. Instead, MYC4 gives everybody involved something to take pride in. By allowing people in developed countries to make business loans to those in the less developed parts of Africa, there’s a real sense of purpose there.
Your fortune in having been born in England or the US or Australia is not something to be ashamed of, but an opportunity to be grateful for. We were born in these countries so that we could help to improve the less developed countries, not by way of hand outs that feed a family for a day and leave them hungry tomorrow, but by sharing our own opportunities with them.
Something else you can’t say of simply donating money:
MYC4 and similar “microcredit” services like Kiva may be the silver bullet we need to eliminate poverty. With charity, you may buy food, clothing, or medicine for a few people, but with microcredit, you aren’t buying anything for anyone, you are only allowing them an opportunity to buy for themselves.
That’s the trick. MYC4.com is not about donations or mere survival, it is about growth, developing undeveloped areas into somewhere anybody would be proud to call home.
There is an interest rate on these loans of around 10-25 percent for the investor to collect upon repayment. While there is a risk of losing your investment, you choose the person you loan to, and MYC4 has a very low rate of default, so even if you do run the risk of losing the investment, the odds are in your favour of getting the investment back. You can’t say that of simply donating money to a cause. Furthermore, you can reinvest your money, plus the interest, into other businesses. How many charities let you donate the same fifty dollars ten times in a row?
It may sound like we’re a little high on the idea, but it is, undeniably, exciting. In the "West" we’ve been trying to simply airdrop food and medicine on poor countries, and it hasn’t worked.
Microcredit is giving people the opportunities they could never have dreamed of before, and so far, it’s making a huge difference. It may not end poverty overnight, but it is making the tools to end poverty, and the path to financial independence, available to everyone.
And if you need another reason?
IT's FUN. AND A HELL OF A LOT MORE PRODUCTIVE THAN TWIDDLING ABOUT ON FACEBOOK
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