Wokai: Developing Microfinance in China
July 17th, 2009Wokai is starting to get some nice news coverage and the video below is a good introduction to what they are trying to achieve and how the local microfinance partners actually work.
As the reporter notes China is not really regarded as a poor nation anymore. How could it be with over $2trln in reserves. But outside of the big cities it is a different stories. Access to finance in rural areas is difficult and state finance has been directed towards major projects and city development.
By creating a platform and helping local partners Wokai is actually laying the foundations for community based finance systems in China. This is a great mix of local and gloabl partnership and shows the power of the internet as a platform for building global networks without government interference.
The financial restrictions in China mean that loans through Wokai eventually become donations as the money cannot be repatriated out of the country (for now). However, it is tax deductible being a donation so you get a good bang for your buck.
Another bonus is the opening up of China to the outside world. Given that censorship is still heavy (many networking sites are often blocked) its great to be able to connect with the local population in an open business exchange. This can only help bring China closer to the international community and foster a greater connection between different people.
Tags: china, connection, development, globalisation, internet, microfinance, money, wokai
July 21st, 2009 at 10:28 am
Thanks for the link to Wokai and I will follow it up
I have been making micro-finance loans through http://www.kiva.org for a few months now but I have been re-evaluating my support as a result of a widening of lending at Kiva to include borowers in the First World. I have decided I need to support the micro-lending site itself, not just the borrowers, and to support the site I must be in agreement with the aims of the organisation.
I have joined http://www.unitedprosperity.org/ which provides loan guarantees to local banks rather than loans. The guarantee from an overseas lender is only required in case of a default, and this keeps the lending local and allows a credit history to be established.
It is a different way of doing things and allows micro-credit to farmers in India, a country with foreign exchange controls which prevent Kiva-style lending.
July 22nd, 2009 at 2:30 am
Grant,
Thanks for your comment. Yes the Kiva story has caused major tremors amongst lenders (I’ve been a lender since 2007). I’m slightly ambivalent about it believing we all have the choice to whom we lend. However, I am starting to see that widening the reach to developed nations where the capital amounts are much higher may cause some capital bleed as well as blurring the original focus.
Having said that there is competition in the market with organisations like United Prosperity and Wokai in China as well as others dotted around the world.
Kiva has had such a major impact that I’m loathe to be critical of it but let’s see how it develops. One suggestion I have is for them to split off the US into a separate platform. We shall see.
If you are on Twitter you may find this list on microfinance commentators and organisations useful.
http://www.socialearth.org/113-microfinance-tweeters-to-follow