Comments on: Investing in Poverty http://blog.mattmecham.com/2007/04/18/investing-in-poverty/ A utopia of randomness and maybe a few things about Invision Power Board Thu, 11 Mar 2010 14:12:40 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: John Grant http://blog.mattmecham.com/2007/04/18/investing-in-poverty/comment-page-1/#comment-3272 John Grant Tue, 22 May 2007 17:44:22 +0000 http://www.mattmecham.com/blog1/2007/04/18/investing-in-poverty/#comment-3272 Marcus, [1] That 5% statistic/study was done by the George Foundation run by Abraham George (basically its only "scholar"). By adding "foundation" to the end he has tried to give his own studies and analysis some credibility. Its impossible to ensure the authenticity of his studies/methods/analysis and notice it has not been referenced by any popular publications or sources. [2] Microloans help start and EXPAND existing fledgling businesses. Just because only 5% were used to start businesses doesn't mean people weren't helped or brought out of poverty. - http://www.unitus.com/sections/poverty/poverty_mf_main.asp "...start or expand small businesses..." [3] While a few have argued that microloans would or could create a cycle of debt, there is little evidence, data or examples that show that this has or does happen. In fact, many have called upon microloans as a way to ESCAPE the cycle of debt some poor are caught in. - http://news.bbc.co.uk/2/hi/business/6297919.stm - http://bad-credit.interest.com/content/articles/bad-credit_story.asp?story_id=1000035246&ID=interest [4] The Evidence "There is overwhelming empirical evidence that huge numbers of small borrowers do indeed pay interest rates at a level high enough to support MFI sustainability (CGAP 2004). MFIs charging very high interest rates usually find that demand far outstrips their ability to supply it. Most of their customers repay their loans and return repeatedly for new loans." (International Monetary Fund [IMF] Report) - http://www.imf.org/external/np/seminars/eng/2006/rppia/pdf/aryeet.pdf Stanford - http://www.gsb.stanford.edu/news/headlines/2004globalconf_khosla.shtml "The success of the more than 6,000 institutions doing some form of microfinance today has proven this wrong." another scholar saying the same thing as the IMF http://72.14.205.104/search?q=cache:aUQ7iBksUdgJ:www.ruralfinance.org/cds_upload/1126184546608_Subsidising_microcredit_interest.doc+There+is+overwhelming+empirical+evidence+that+huge+numbers+of+poor+borrowers+can+indeed+pay+interest+rates+at+a+level+high+enough+to+support+MFI&hl=en&ct=clnk&cd=1&gl=us&client=safari [5] Oh I almost forgot, microloans have an average repayment rate of around 95-100%, with the average being 99%. That means people aren't getting stuck in cycles of debt, but are able to pay back these loans WITH INTEREST. Oh yeah, and theres the fact that over 410 million have been brought out of povert with microloans. - http://www.opportunity.org/atf/cf/%7B4FDDA71B-2D42-4FAE-84B0-75A6C2E25802%7D/Microfinance-Alleviating-Global-Poverty.pdf - http://www.smh.com.au/news/world/microcredit-lifts-410-million-out-of-poverty-and-counting/2006/11/01/1162339918691.html I say we do our homework before coming to quick conclusions on an issue. Matt, its a great idea, one that has affected a lot of people, and im glad to see you are taking advantage of it. [john] Marcus,
[1] That 5% statistic/study was done by the George Foundation run by Abraham George (basically its only “scholar”). By adding “foundation” to the end he has tried to give his own studies and analysis some credibility. Its impossible to ensure the authenticity of his studies/methods/analysis and notice it has not been referenced by any popular publications or sources.

[2] Microloans help start and EXPAND existing fledgling businesses. Just because only 5% were used to start businesses doesn’t mean people weren’t helped or brought out of poverty.
– http://www.unitus.com/sections/poverty/poverty_mf_main.asp
“…start or expand small businesses…”

[3] While a few have argued that microloans would or could create a cycle of debt, there is little evidence, data or examples that show that this has or does happen. In fact, many have called upon microloans as a way to ESCAPE the cycle of debt some poor are caught in.
– http://news.bbc.co.uk/2/hi/business/6297919.stm
– http://bad-credit.interest.com/content/articles/bad-credit_story.asp?story_id=1000035246&ID=interest

[4] The Evidence
“There is overwhelming empirical evidence that huge numbers of small borrowers do indeed pay interest rates at a level high enough to support MFI sustainability (CGAP 2004). MFIs charging very high interest rates usually find that demand far outstrips their ability to supply it. Most of their customers repay their loans and return repeatedly for new loans.” (International Monetary Fund [IMF] Report)
- http://www.imf.org/external/np/seminars/eng/2006/rppia/pdf/aryeet.pdf

Stanford
- http://www.gsb.stanford.edu/news/headlines/2004globalconf_khosla.shtml
“The success of the more than 6,000 institutions doing some form of microfinance today has proven this wrong.”

another scholar saying the same thing as the IMF
http://72.14.205.104/search?q=cache:aUQ7iBksUdgJ:www.ruralfinance.org/cds_upload/1126184546608_Subsidising_microcredit_interest.doc+There+is+overwhelming+empirical+evidence+that+huge+numbers+of+poor+borrowers+can+indeed+pay+interest+rates+at+a+level+high+enough+to+support+MFI&hl=en&ct=clnk&cd=1&gl=us&client=safari

[5] Oh I almost forgot, microloans have an average repayment rate of around 95-100%, with the average being 99%. That means people aren’t getting stuck in cycles of debt, but are able to pay back these loans WITH INTEREST. Oh yeah, and theres the fact that over 410 million have been brought out of povert with microloans.
– http://www.opportunity.org/atf/cf/%7B4FDDA71B-2D42-4FAE-84B0-75A6C2E25802%7D/Microfinance-Alleviating-Global-Poverty.pdf
– http://www.smh.com.au/news/world/microcredit-lifts-410-million-out-of-poverty-and-counting/2006/11/01/1162339918691.html

I say we do our homework before coming to quick conclusions on an issue. Matt, its a great idea, one that has affected a lot of people, and im glad to see you are taking advantage of it.
[john]

]]> By: Scott Oldford http://blog.mattmecham.com/2007/04/18/investing-in-poverty/comment-page-1/#comment-2580 Scott Oldford Fri, 20 Apr 2007 02:04:52 +0000 http://www.mattmecham.com/blog1/2007/04/18/investing-in-poverty/#comment-2580 That is an amazing site, and a really good idea.. looking for a couple people to invest into now. Thanks for the post matt. That is an amazing site, and a really good idea.. looking for a couple people to invest into now. Thanks for the post matt.

]]> By: Matt http://blog.mattmecham.com/2007/04/18/investing-in-poverty/comment-page-1/#comment-2579 Matt Thu, 19 Apr 2007 14:36:47 +0000 http://www.mattmecham.com/blog1/2007/04/18/investing-in-poverty/#comment-2579 I should mention that they are already pre-existing businesses and that are looking to expand. I should mention that they are already pre-existing businesses and that are looking to expand.

]]> By: Marcus http://blog.mattmecham.com/2007/04/18/investing-in-poverty/comment-page-1/#comment-2578 Marcus Thu, 19 Apr 2007 08:10:50 +0000 http://www.mattmecham.com/blog1/2007/04/18/investing-in-poverty/#comment-2578 Actually, Microloans, while they may sound great, simply end up putting the poor into a debt cycle. Only 5% of those given Microloans actually end up starting businesses. Just thought I should mention that ;) Actually, Microloans, while they may sound great, simply end up putting the poor into a debt cycle. Only 5% of those given Microloans actually end up starting businesses.

Just thought I should mention that ;)

]]> By: Telemacus http://blog.mattmecham.com/2007/04/18/investing-in-poverty/comment-page-1/#comment-2577 Telemacus Wed, 18 Apr 2007 15:45:41 +0000 http://www.mattmecham.com/blog1/2007/04/18/investing-in-poverty/#comment-2577 Definitely a break out idea and a brilliant one too! Thanks for posting this Matt. Definitely a break out idea and a brilliant one too!
Thanks for posting this Matt.

]]>