My $25 experiment...Does Micro Credit Work?

Today I became an international investor, I invested a whopping $25 in Christine Akia's health care business. Christine is a nurse in Mbale, Uganda she is seeking a loan of $600 to improve her clinic. Read more about Christine and her business here.

What is Micro Credit? Is Micro Credit the answer? Does it work, and can my $25 make a difference?

What is Micro Credit?

I was first introduced to the idea of micro credit when I was editing a fellow student's Indiana International & Comparative Law Review article. I thought the idea of micro credit was very interesting but I totally disagreed with the conclusion the student made that this concept could work here in the US. The basic idea is that investors loan "small" sums of money to entrepreneurs in poverty stricken areas of the world at a low/favorable interest rate. Most of the people in these extremely impoverished countries have very few financing options. Most of the time their only option to borrow money is to go to the equivalent of a "loan shark."

The concept of micro credit was given a start by Muhammad Yunus and the Grameen Bank in Bangladesh. For his efforts in promoting and developing Socially Responsible Investing, Professor Yunus won the Nobel Peace Prize.

"The one message that we are trying to promote all the time, that poverty in the world is an artificial creation," said Professor Yunus told the Nobel Committee upon learning he had won the Prize. "It doesn't belong to human civilization, and we can change that, we can make people come out of poverty and have the real state of affairs."

To read more about Professor Yunus and Microfinance click here.

Recently, Frontline/World devoted a segment to Microfinance and Micro Credit. To see the video and read the story click here.

My $25

After watching the Frontline/World segment, reading about extreme poverty and getting involved with the ONE campaign, I thought I'd try my hand at being a lender and see if my little bit would really make a difference. I choose to lend through Kiva.org, because they were the group profiled in the Frontline segment. To date I believe Kiva has a 100% loan repayment rate. If this really works this gives westerners an opportunity to make a real difference in the lives of those borrowing the money. It also empowers the entrepreneurs because its not charity, its investors, investing in good ideas. It also gets money directly into the hands of those who need it instead of risking the possibility of corrupt government officials getting a share of the money.

As of this post Christine's loan is already 100% funded, I will post updates on how she is doing with the money as I get them and we will see if this can be one more tool in this fight against extreme poverty.