“Banks are lending only to large MFIs. We are in a strong position. We are holding discussions with MFIs who are facing strain and helping them by taking over their clients,”

Since there are so many small MFIs out there who are having trouble finding funding, why do Kiva and Microplace run out of people to loan to?  It has happened multiple times that I have gone to microfinance lending platforms and have not been able to loan money.  If these small MFIs in India are having trouble getting money for their recipients, why don’t they reach out to these organizations?  The article also mentions that there is a demand for 55 billion dollars while India currently only provides about 5 billion in microfinance loans.  If the people are out there, wouldn’t it just be a matter of connecting them to the right organizations?  It seems like there are plenty of lenders ready to donate to individual recipients, but not so many who are willing to donate to MFIs. What if there was a microfinance lending platform that was similar to Kiva and Microplace, but instead of donating money to individual recipients, you could donate to different MFIs?  Lenders could give loans to MFIs, who would in turn give loans to entrepreneurs.  The loans would have to be for a longer term than normal since they would most likely be bigger loans.  The model could be either non-profit or provide a return, depending on the business model, and it could help smaller MFIs who are having a harder time coping with the current economic crisis.  Of course there would be pros and cons to lending platform, but I think that if they were weighed out, the pros would win.

Tomorrow afternoon, Washington CASH is having their 8th annual Holiday Bazaar! 30 of Washington CASH’s clients will be displaying and selling their items throughout the day. There will be a great variety of products and services including hand crafted items, food products, professional services and household items. All of the vendors at the Bazaar have started their businesses with the help of Washington CASH’s services - and many of them have seen advancements in their businesses through the help of microloans.

This is a great opportunity to not only do some christmas shopping, but to support your local businesses…and your local microenterprise organization!

Where: Northwest African American Museum, 2300 South Massachusetts Street, Seattle, WA 98144

When: November 22, 11:00a.m. - 4:00p.m.

• Crunch time for microfinance ctd
• Microfinance and the financial crisis
• How the credit crisis effects microfinance

Please join us this Tuesday for a great event featuring the Financial Services for the Poor office of the Bill and Melinda Gates Foundation. Here are the details.

Two of my host-brothers, Abdalla and Socy, are perfect micro-loan candidates.

Socy is currently unemployed, and every time I ask him why he doesn’t look for a job he always tells me the same thing, “I don’t want to work for someone else.  I want to have my own business and make my own money.”  His fear comes from a wide disregard for labor rights and the widespread exploitation of unemployment.  As job demand increases, the poorly regulated labor market has allowed employers to lower wages and have poor working conditions.  The most wasteful aspect of a developing economy is idleness.  Idleness is widespread.  Being idle is perpetuated through strong family support structures where members of a family with jobs are expected to support the rest of the family.

Socy, like most, doesn’t like being unemployed.  He wants to work, but can survive doing odd jobs, hosting interns like me, and getting help from his family.  Finding a job often means standing somewhere for hours until you get chosen to work that day.  Socy started a small fruit and vegetable stand outside the front of the house I am living at when he was younger.  After a while he grew tired of the long, slow business hours, and gave Abdalla the shop.

Abdalla is a teacher.  He works all day while his wife runs the shop.  After work and on weekends, he runs the shop. I was nervous to ask how much he would make a day, but ended up caving into curiosity.  He said, “On a good day, maybe 900 Ksh ($12).  On a bad day, sometimes you might just sit here sleeping, making nothing.”  From the earning, he gives his son 40 Ksh daily for transport to school, and uses his teacher salary to pay school fees and take care of the family. In the end, the store does little, but it is a start.

Abdalla’s dream – expand his shop.  His stand is recognized for having quality products, but he does not have enough variety to attract a large client base.  He wants to build an extension onto his shop and offer a larger variety of fruits and vegetables, maybe even getting into selling other products.

Socy’s wife has a clothes selling business.

Socy’s dream – open up a store where he can sell the clothes his wife sews.  He wants to be able to both sell the products at his shop and walk around the neighborhood selling door to door.  To do that, though, he needs a loan.  He needs materials to build his shop, fabric to create a product base, and money to live on until his business starts to provide for him and his family.

Living life as these two do isn’t easy and it isn’t flexible.  The concept of savings in Kenya is foreign. If you have money, you either spend it or give it to someone else who needs it.  Most microfinance institutions begin by forcing their lenders to save a certain percentage of their earnings either weekly or monthly, but some cannot afford that or are scared of those restrictions.  Microfinance institutions work with groups more often than with individuals, which leaves a lot of people feeling like getting a loan is out of reach for them.

Talking to both of my host-brothers, I encouraged them to seek out some of the local microfinance institutions to fund their dreams.  Both agreed it would be a great idea, but have not done much towards it.

Two final issues come to mind.  First, the market is saturated with small businesses here.  There are a million and one shops scattered all over cities, towns, and villages, and they often offer the same goods.  People with good business ideas are in competition with many others, which lowers their ability to have a truly successful business.  Second, microfinance is quite far from being accessible to all.  People in impoverished areas do not see it as an avenue available to them.  Work needs to be done to advertise microfinance to individuals, and to make systems of monitoring and accountability of microfinance work focus around individuals as well.

I praise the initiatives of microloan sites that do work on an individual basis.  They must continue to spread their word and show motivated people that they too could qualify for a loan.

There are people hungry for micro financing.  They need to be reassured that it is possible for anyone to have access to a loan so that they too can benefit from the funding of global philanthropists.