Stuff My Sisters Will Like

To Jenny, Katie and Laura, From Their Brother, Victor

Microloan FTW December 20, 2012

Filed under: Stuff,World Peace — wumpushunter @ 8:00 am
Tags:

Efforts to raise the standard of living in Africa is certainly not a new thing.  There are a number of hurdles that arise from these valiant efforts, but things are changing.  The internet is going to have an enormous impact on what happens in Africa over the next generation.  One thing that I believe has the potential for enormous impact is Microloaning.  Small donations by people in the world to poor rural nations are going to put money in the hands of people that can make the biggest changes to infrastructure.  Traditional loaning to developing nations would go something like this…

World Bank gives the country several million dollars to put in a power plant (or other theoretically awesome thing)

None of the infrastructure is in place to take advantage of the power produced

The country can’t afford resources needed to power the power plant anyway because of fierce competition by industrial countries

Country prints vast sums of money to pay off World Bank, tanking the value of their currency

Rinse, Wash, Repeat.

Microloaning works more like this…

Farmer needs money to by a water pump to better irrigate his crops

Several people loan him the money he needs to buy a water pump

Farmer has higher yields on his farm, and is more immune to potential drought and has more crops to sell and export

He can use the extra money to pay down his debt and start investing in his farm

Developing countries don’t need any one big change, they need millions of small ones.

 The internet is going to change everything.

-tiffani

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