The benefits of micro lending
Micro- lending: Years ago I entered into the world of micro lending as a way to make a difference in the world with my small earnings as an educator. I used a now shuttered site owned by Ebay. I really enjoyed it. I watched as the Muslim women that I supported grew their rural businesses in Sierra Leone and other North west African countries. But I wasn't in it too long before I was refunded my money and the site was shut down.
During this brief lending period of a few years, I studied about the countries, scanned Google Earth and read articles to learn as much as I could about the semi-desert areas where these women were raising chickens or hatching eggs and selling meat. I was especially proud of a chance to help the ladies.
Yes, my money was being repaid to me and at an interest rate I could live with. I chose the smallest rate possible- one percent. I was not interested in making money. I was not interested in ripping off. I wanted to be a difference to someone who really needed the money to improve their lives. And I believe that it made a difference. I felt good about myself.
Those of you who have read previous blog entries may be asking, What? This guy does something besides slam Democrats! Unbelievable!
I am a immigrant to this country. I met my wife when she was a foreign student in high school to my high school in my birth country. Years after college and the world of work, we connected, married and now I am an American citizen with 36 years work experience in America. My children are a child psychologist and a children's attorney.
But, I was raised on a farm in the frozen north. I spent two years in my grandfather's homestead house without running water and without electricity, before my dad was able to bring in electricity and change our lives forever. I knew what off grid living was before the term ever existed. And I knew its harsh realities.
I also felt that in earning a living, I had not done much to impact people's lives in life changing ways and I wanted to be a part of it. My internet research taught me about the benefits of micro-lending and I was caught by the possibility. So the Ebay compare was the first step.
Now I use a company called Kiva. There are no charges with this company. I invested what I could. My first investment was to a cattle farmer in Kenya. In his request for a loan he stated that he had three daughters and that he had to pay to send them to school. He wanted to expand his cattle business so that he could pay for his children to go to school. This struck the heart of a school teacher and I funded him fully. His payments were regular and consistent and within about 16 months he had fully repaid the loan.
I lost no money, earned about 4% interest and was ready to reinvest the money again. The same farmer applied for another loan to further expand his business. This time many more people had contributed funds, but he was not fully funded and the time was running short to be fully funded. I took a portion of his repayment and finished his funding.
I still had a significant portion of my initial investment left to fund more loans. I took a risk on a young kid in Colombia. He was in a jungle area raising pigs and need a concrete pen, feed and piglets. I invested the remainder of my funds with him. Interestingly, the life cycle of a pig is short enough that he was able to repay the loan in full before the cycle was due. He also requested a second loan. Another lender funded half of his request and I funded half. So now I had two men, one in Kenya and one in Colombia who had repaid loans to me and who had borrowed money from me once again.
Yet, this position meant I still had money available to lend out and I wanted it all out in loans, being used to help others. So I lent money to another pig farmer in the hillsides of Colombia to assist him with his hog production. And I still had enough money left to lend money to a single mother of several children who was running her own dairy business in Kenya and needed more calves and feed.
There are several principles in this lending that I did not know about and that have become self-evident. While I could risk losing every penny I invested, I have no lost any money and my money has be productively at work. It was working instead of sitting stale in a bank account. I should have been doing this decades ago. The money was working elsewhere on the globe and I didn't miss it at all. It was a painless investment in other human beings.
The money was repaid and I was able to re-lend it to the same farmers. A pattern of trust was being developed in my lending with the borrower because the borrower repaid the loan and asked to be considered again. It was easier to lend again when trust had been created in the good management of my first loan. The father also earned the money to grow his business and pay for his girls' year in school. So the money did not improve one life, it improved many lives. Food was also being produced in that area that could benefit others.
It turns out in the analytics of the lending that I have turned the money over in loans 5 fold. This means that the same money has been reused 5 times. I did not lose it, it did not get eaten up or used up. It is still the same money but always becomes available to lend out again, perhaps in perpetuity. What is the value of a small amount of money that over 30 or 40 years becomes 200 times what it was in terms of use and value?
I never in my wildest dreams realized that a small amount of money could have real value for other human beings 200 times over. And what if more people used such a principal to invest in human beings and their productivity? No wonder this lending organization is currently ranked with a capital base of over $1 billion.
And I am now a lender to 4 people, one of whom is a woman, again. Hooray! In honor of my mother, a hard working nurse and farm wife. All 4 are farmers. I now lend money on two continents other than North America. And I have invested a modest increase in my lending because I wanted to do a bit more and because I am now on a very limited budget as a retiree. So while I may not have all the money I would want to feel free to lend more, my money is still out there on this planet having an effect, changing other families' lives, helping other families. And the money will once again return to me. And I will be able to trust these farmers who repay and gladly loan to them again, slowly but surely increasing their wealth and improving their lives.
And as this cycle of lending continues, small increases in my initial investment through 4% loan revenues help me move from lending from 1 person to two, to four and perhaps more. You may ask how this is possible with such small percentage gains. It is not hard when you loan to people who have no money and who so highly value US dollars which can be converted into so much of their own currency. My few dollars are like gold to these poor farmers, and they use it wisely, pay it back carefully and ask for the right to use it again. They value my investments greatly because it is a guarantee to them of improving their lives.
This could be an egotistical experience but for me, it is not so. This is about going upstairs at night in grandpa's house with only mom's candle to guide us and to cast monstrous shadows on the wall as we headed to bed. This is about heating up snow on grandma's wood stove to create warm water for a bath. This is about walking through the snow to the outhouse to empty the night's chamber pots. It is about understanding this way of life and knowing that others don't have to live this way, if we take the risk and help out.
So I am a micro-lender. The people who contract with me have taught me so much about faith in others that I will never meet and will never know. They have taught me how much they care about my commitment to them and how much they value what little I have to share. These people have sent me a hidden message- that if I believe in them, they will return the faith and I will be able to help more and more. And my faith will not be in one more human, but in many. And that life in more places on this planet become just a bit better for others because I risked a little bit.
During this brief lending period of a few years, I studied about the countries, scanned Google Earth and read articles to learn as much as I could about the semi-desert areas where these women were raising chickens or hatching eggs and selling meat. I was especially proud of a chance to help the ladies.
Yes, my money was being repaid to me and at an interest rate I could live with. I chose the smallest rate possible- one percent. I was not interested in making money. I was not interested in ripping off. I wanted to be a difference to someone who really needed the money to improve their lives. And I believe that it made a difference. I felt good about myself.
Those of you who have read previous blog entries may be asking, What? This guy does something besides slam Democrats! Unbelievable!
I am a immigrant to this country. I met my wife when she was a foreign student in high school to my high school in my birth country. Years after college and the world of work, we connected, married and now I am an American citizen with 36 years work experience in America. My children are a child psychologist and a children's attorney.
But, I was raised on a farm in the frozen north. I spent two years in my grandfather's homestead house without running water and without electricity, before my dad was able to bring in electricity and change our lives forever. I knew what off grid living was before the term ever existed. And I knew its harsh realities.
I also felt that in earning a living, I had not done much to impact people's lives in life changing ways and I wanted to be a part of it. My internet research taught me about the benefits of micro-lending and I was caught by the possibility. So the Ebay compare was the first step.
Now I use a company called Kiva. There are no charges with this company. I invested what I could. My first investment was to a cattle farmer in Kenya. In his request for a loan he stated that he had three daughters and that he had to pay to send them to school. He wanted to expand his cattle business so that he could pay for his children to go to school. This struck the heart of a school teacher and I funded him fully. His payments were regular and consistent and within about 16 months he had fully repaid the loan.
I lost no money, earned about 4% interest and was ready to reinvest the money again. The same farmer applied for another loan to further expand his business. This time many more people had contributed funds, but he was not fully funded and the time was running short to be fully funded. I took a portion of his repayment and finished his funding.
I still had a significant portion of my initial investment left to fund more loans. I took a risk on a young kid in Colombia. He was in a jungle area raising pigs and need a concrete pen, feed and piglets. I invested the remainder of my funds with him. Interestingly, the life cycle of a pig is short enough that he was able to repay the loan in full before the cycle was due. He also requested a second loan. Another lender funded half of his request and I funded half. So now I had two men, one in Kenya and one in Colombia who had repaid loans to me and who had borrowed money from me once again.
Yet, this position meant I still had money available to lend out and I wanted it all out in loans, being used to help others. So I lent money to another pig farmer in the hillsides of Colombia to assist him with his hog production. And I still had enough money left to lend money to a single mother of several children who was running her own dairy business in Kenya and needed more calves and feed.
There are several principles in this lending that I did not know about and that have become self-evident. While I could risk losing every penny I invested, I have no lost any money and my money has be productively at work. It was working instead of sitting stale in a bank account. I should have been doing this decades ago. The money was working elsewhere on the globe and I didn't miss it at all. It was a painless investment in other human beings.
The money was repaid and I was able to re-lend it to the same farmers. A pattern of trust was being developed in my lending with the borrower because the borrower repaid the loan and asked to be considered again. It was easier to lend again when trust had been created in the good management of my first loan. The father also earned the money to grow his business and pay for his girls' year in school. So the money did not improve one life, it improved many lives. Food was also being produced in that area that could benefit others.
It turns out in the analytics of the lending that I have turned the money over in loans 5 fold. This means that the same money has been reused 5 times. I did not lose it, it did not get eaten up or used up. It is still the same money but always becomes available to lend out again, perhaps in perpetuity. What is the value of a small amount of money that over 30 or 40 years becomes 200 times what it was in terms of use and value?
I never in my wildest dreams realized that a small amount of money could have real value for other human beings 200 times over. And what if more people used such a principal to invest in human beings and their productivity? No wonder this lending organization is currently ranked with a capital base of over $1 billion.
And I am now a lender to 4 people, one of whom is a woman, again. Hooray! In honor of my mother, a hard working nurse and farm wife. All 4 are farmers. I now lend money on two continents other than North America. And I have invested a modest increase in my lending because I wanted to do a bit more and because I am now on a very limited budget as a retiree. So while I may not have all the money I would want to feel free to lend more, my money is still out there on this planet having an effect, changing other families' lives, helping other families. And the money will once again return to me. And I will be able to trust these farmers who repay and gladly loan to them again, slowly but surely increasing their wealth and improving their lives.
And as this cycle of lending continues, small increases in my initial investment through 4% loan revenues help me move from lending from 1 person to two, to four and perhaps more. You may ask how this is possible with such small percentage gains. It is not hard when you loan to people who have no money and who so highly value US dollars which can be converted into so much of their own currency. My few dollars are like gold to these poor farmers, and they use it wisely, pay it back carefully and ask for the right to use it again. They value my investments greatly because it is a guarantee to them of improving their lives.
This could be an egotistical experience but for me, it is not so. This is about going upstairs at night in grandpa's house with only mom's candle to guide us and to cast monstrous shadows on the wall as we headed to bed. This is about heating up snow on grandma's wood stove to create warm water for a bath. This is about walking through the snow to the outhouse to empty the night's chamber pots. It is about understanding this way of life and knowing that others don't have to live this way, if we take the risk and help out.
So I am a micro-lender. The people who contract with me have taught me so much about faith in others that I will never meet and will never know. They have taught me how much they care about my commitment to them and how much they value what little I have to share. These people have sent me a hidden message- that if I believe in them, they will return the faith and I will be able to help more and more. And my faith will not be in one more human, but in many. And that life in more places on this planet become just a bit better for others because I risked a little bit.
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