Kiva: Stories from the Field - Education at any cost

Here is a moving story from our intrepid Kiva fellow in the Philippines, Sloane Berrent. It details the lengths to which people will go in order to be educated. The desire for education and the knowledge that it can lift people from impoverishment is clear and stark.

Within the story lies another imperative: the desire to give. Giving has become my passion whether it’s time, money or stuff. Yes reforming the global financial system is interesting but nothing will ever surpass the desire to perform service to others in a direct way. It’s our most universal law.

To raise $42 for a boat would take a few seconds these days. It’s that low cost, diversified approach that makes the web network so powerful.

These Stories from the Field are wonderful to read. People want connections, they want to see they are making a difference and they want it to be real.

Well it doesn’t get any more real than this.

$ Watch: BRICs get down to business in Yekaterinburg

Yekaterinburg could well be a name to remember much like Maastricht, Yalta, Bretton Woods and other places that carry major political history on the back of their relative obscurity. A few weeks ago the big 4 players, Brazil, Russia, China and India, met to in Yekaterinburg to discuss the vexed issue of the $, US assets and US global financial dominance.

As I’ve discussed before there is a major shift underway in the way the global market is structured. Not just in terms of currencies but also trade and influence. The BRICs have a powerful case to make: 40% of global currency reserves and almost half the world’s population (though Russia’s population is declining, a somewhat serious issue).

There is a strong feeling that the US has acted recklessly overt he last 30 years in flooding the world with $ and creating huge imbalances which have caused such chaos in global markets. So whilst there is always plenty of posturing and grandstanding, especially from the Russians, there is a real case for the US to answer:

- Global trade imbalances.

- Cowboy capitalism.

- Turbo boosted monetary expansion.

- Instability in global financial markets.

It’s also interesting that the meeting of the SCO (Shanghai Cooperation Organization) was held at the same tim and the US was not invited even though it wanted to attend. There is a strong argument that there is no real alternative to the $ but that doesn’t excuse the facts. One dominant currency has not helped create a stable system. It has simply allowed to issuer to experience huge profits from seigniorage and wield extraordinary political and economic power.

And can we really take the rating agencies seriously? They are all US based organisations. Ultimately whether the $ loses influence or not depends on the alternatives. I still believe a commodity backed currency is a likely development, given the nations involved.

At the same time the development of local currencies will help create a more stable and complex system. For now though expect more talk about a $ alternative and expect it to be driven by the BRIC crew starting with the upcoming G8 summit in Italy.

Wokai: Microfinance on the ground in China

Because of its closed monetary system, microfinance, using external funds, has been tricky to deliver into China. So you will notice Kiva does not offer loans there as yet. However, Wokai, which I featured a while ago, has started up and is making great progress in delivering finance to those who are unable to access it through traditional banking channels.

It’s always good to see footage from the field and here is a great video interview with Casey Wilson, the co-founder and CEO, shot by GrubbyLens. These personal stories help build the picture and make the connection more real.

Facebook for Farmers from grubbylens on Vimeo.

Intentional Money: Give, Lend or Buy

According to my colleague and friend, Branton Kenton-Dau , human beings are intentional devices. We are here for a purpose, a reason and our human form is a structure for expressing intention. I like that. Every time we act we are expressing something about ourselves even in the most nano way.

So when it comes to managing our money we are faced with the same questions: who am I and what is my intention?

It seems to me that we have 3 ways of using our money: Giving, Lending or Buying.

Giving is the simple act of directing one’s money to somone else with no expectation of financial return inclduing the original gift. But there is a clear intention that the gift should have some kind of impact. Simply this can be regarded as giving money to charity or a fundraising appeal. Your return is hopeful, that some positive outcome or impact will be achieved by way of your contribution. This is a powerful way of expressing your intention. Of course one can also give your time, goods and services for no financial return and this is a more hands on approach.

Lending, otherwise known as saving, is also a powerful tool. When you deposit your cash in the bank you are in effect lending to the bank. In legal terms you are an unsecured creditor of the bank. There is little intention here as we tend to see the process as the bank doing us a favour. But when it comes to peer to peer lending, microfinance or simply lending money directly to friends, the process takes on a deeper signifiance. There is a more direct energy involved and a desire to participate in an outcome. The personal connection to borrowers helps create this possibility. Another form of lending is to large business via corporate bonds. This is akin to saving in the bank except again there is a directness involved. A large business wants to raise $100m and I lend it $20,000. I’m a small piece of that but I’m essentialy helping to fund the business. But there is still some distance there as I’ve probably dealt through a boker or investment advisor. What I am keen to see is more peer to small business in developed countries. We’ve seen Kiva open up loans into the US now and soom we will see more acceptance in people lending larger sums to small businesses. Not so much microfinance as peer finance. What better way to create strong and trusted communities than people lending to businesses they buy from.

The third form of intentional money is the process of buying. This is two parts: buying for ownership in a business and buying for personal consumption. The latter is the world of ethical and values based purchasing. It’s a well developed market and I won’t got into that. But actually directing your money into businesses through ownership is another way to direct the flow of your financial intention. Whether it’s ethical investing at the macro level (buying into ethical funds) or at the micro level (investing in start ups that share your goals and values). The micro level is more interesting because the impact of your investment is greater. In the macro world of stock markets and large companies your investment is not so influential because of the way institutional investors control so much of the market.

We have many choices when it comes to dealing with our money. Each time we make a financial decision we have an opportunity to express our intention. Its a very powerful force. The more we align our choices with who we are, the more powerful our impact becomes. We become an efficient intentional system

As they say money talks.

New Zealand: Small Business crying out for Microfinance

Following on from the news about Kiva moving into the US small business market, fleet footed Ben Kepes calls us to action in New Zealand.

Small businesses in NZ have seen no relief from high interest rates in the recent lowering of rates here. At the same time credit is hard to come by and many business owners have resorted to credit cards to keep their businesses going.

This is a troublesome state of affairs given its the productive economy that has to earn the dollars to pay back the humungous debt necklace hanging around the necks of Kiwis.

So what’s the state of play with microfinance at the moment? Well Kiva is going great guns. It’s really tapped into people’s desire to help and be generous in giving but created this new joy of creating and empowering change for people. It connects people together and that personal touch pulls the punters in.

The more tradtional p2p lending services are not finding life so easy. Charis Palmer reports here on recent developments citing problems for Prosper in the US and some success for Zopa in the UK. Locally Peermint has fallen by the wayside, Nexx hasn’t really got going and Lending Hub has joined a busy Australian market.

So there’s no shortage of platforms but it’s proving harder than expected to deliver the business. But there seems to be no platform for small businesses to secure funding. This is certainly an opportunity as there is certainly a strong and established market on the borrowing side with appropriate forms of due diligence available.

The major stumbling block for p2p start ups has been compliance with various regulatory authorities. However there may be ways around this and with politicians supportive of the small business sector the time may have come for a serious attempt to create what would be a mini-corporate bond market funded by the retail investement market direct.

Now that sounds like a major step forward in building a more productive economy.

Kiva: Game changer

Early in 2008 I commented on the shaping of a post-imperial world where the flow of investment funds, and coporate takeovers, was coming from the East to the West, with China, India, Russia and the Gulf States recycling $ reserves and new found wealth into weak and failing companies in the West.

The catastrophic implosion of the US financial system in the last year has merely emphasised this change in the balance of monetary might.

So when Kiva, that beacon of social entreprenuership, decided to offer loans in the US itself, there was a huge intake of breath. The US needs microloans??!!!

Of course it does. How do small businesses get funded? Normally by people taking out second mortgages, borrowing from friends or ramping up credit cards. In fact I’m told many businesses fund cashflows problems using personal credit cards. Why?

Because banks have a model where they lend on housing as collateral…oh yeah that worked well…not.

The old fashioned approach to banking (one my father was involved in for 42 years) was lending to small business people and supporting them through the ups and downs of the business cycle. Investing in people and creating relationships of trust.

I think we are headed back to this and it’s peer to peer lending that is making this happen. The web itself has allowed these bonds to be built, that’s what networks are after all. Lots and lots of micro connections. Isn’t that the amazing thing about the web? It’s so huge and vast yet it’s simply a conglomeration of molecules connected together.

I know I’ve been bagning on about this for ages but banking, like media, will be forced to change. The micro world is causing new networks to be created, new bonds to be formed and new efficiencies to be found.

Harnessing the power of the web is allowing this to happen.

Microfinance has shaken up the banking world. I enjoyed reading Matt Flannery’s piece on the Kiva story.

Microjustice will no doubt change the legal world in due course.

We already have microrelationships, micromedicine surely on the way.

And the biggest prize of all………..microgovernment.

The change is coming, the inexorable march of system reorganisation is humming away in the background. It’s not top down, it’s an unseen mass movement with no control function. A pure chaotic system in action, free to develop and receive feedbacks in real time.

Who would have thought a lender from Domenica would be funding a borrower in the US.

Yes times are changing.