MicroPlace, Micro-loans in South Africa

Returning to the subject of micro-finance, the theme of the Cape Town category in the 2011 Living Labs Global Award, I’d like to mention another organization that is already facilitating micro-loans through their website platform. MicroPlace.org is a broker owned by Ebay and specializes in micro-loans to organizations. As opposed to Kiva, which offers the opportunity to lend directly to individual borrowers, MicroPlace connects lenders with larger groups, which can vary from a collection of entrepeneurs and low-income workers, to community development organizations and geographic-specific lending organizations. Most of the lending opportunities listed at MicroPlace explain that the lender will actually be investing in a security issued by another organization (usually a non-profit specializing in micro-finance, like the Calvert Institution) and that “your investment may be used to backfill funds that have already been disbursed to this project.” The interest and principal, then, is eventually paid back to the lender by the particular non-profit.

The minimum investment at MicroPlace is $20, though the website platform allows you to enter an amount of your choosing. Like Kiva, MicroPlace also offers pictures of the locals in need of funds and involved in the project, and a brief description of the difficulties facing the particular region and the details of the project at hand, so the lender has a sense of where their investment is going.

MicroPlace is mentioned as a good “group” investing option in this article on micro-finance and the credit crunch from The Wall Street Journal. Ashwini Narayanan, MicroPlace’s general manager, is quoted as saying the average loan per user is $1,700, but that some lenders have given as much as $250,000, and can earn between 1% and 3% on their investment per year.

Also, as a parting note, Grameen Bank founder and Nobel Peace Prize winner, Muhammad Yunus--often referred to as the “father of microfinance”--is now facing charges of defamation in his home country of Bangladesh for remarks he made to a journalist in 2007. Nobody really expects the charges to stick, but the investigation points to a larger issue, what some people are calling a “personal grudge” being pursued by the Prime Minister of Bangladesh, Sheikh Hasina, who’s been on rocky terms with Yunus ever since his brief foray into politics after winning the Nobel prize. Tom Cropper writing in the Guardian has a good wrap up of the situation here, claiming that the personal attacks, “could prove highly damaging not only for Yunus, but also the concept of business as a force for social good, particularly relating to microfinance.” Cropper goes so far as to say that “The future of the entire sector hangs very much in the balance,” pointing to an increased incidence of farmer suicides in India, politicians urging borrowers to default on repayments, and the