Microfinance Overview and Clinical Economics

Introducing microfinance to a new area presents a ton of problems that I'm not sure how we will solve (only that we will).  There are so many unknowns to cover, especially considering that I've never been there.  In addition to the problems we know about, who knows what obstacles will pop up?

I should start by being clear about what I'm going to do in Africa (and hence the purpose for this blog).  Micro finance is making small loans to defeat poverty.  Poverty is like a disease in that it has causes, symptoms, it spreads, and it weakens and destroys, but it moves in predictable and treatable patterns (1).  Like all diseases, treatments evolve over time.  In the old days we would throw lump sums of money at a 3rd world government and watch it get squandered away.  We have gone through periods of making countries switch their entire economic system to a free market economy, only to see socialistic systems regain control.  We, as a country, have even given out the tiniest fraction of our revenue out as international aid, even while loudly proclaiming to uphold the Millenium Development Goals (which include pledging to give much much more than we do) (2).

The point is that we, as private citizens, have introduced specialization into the eradication of poverty.  By making 'saving the world' the goal of people, rather than governments, we have introduced efficiency into the equation.  Sierra Leone and the rest of the 3rd world countries dont need lump sums of cash.  They need sustainable development, and more than just economically.  They need schools, clinics, hospitals, churches, banks, and basic systems of infrastructure.  More importantly, they need to be taught how to do these things themselves.

We plan on introducing a system to our little part of Sierra Leone in which people can take out a small loan from us.  They would then use it in some job related fashion.  If you want to start a cleaning business but have no money, you would need a broom, windex, and all of that.  For relatively few dollars, someone can start a whole new entrepreneurial life.  They would then pay us back starting six months or a year later in monthly increments.  The money we take in would be reloaned out.

This, combined with our other efforts (renewable energy, education, and spiritual outreach to name a few) can create a whole new life for people right now who don't have much to look forward to.

More specific details on trip preparations tomorrow...

1. Treating poverty as a disease is an approach known as Clinical Economics, in which I am a firm believer and practitioner.  More about it here: http://www.amazon.com/End-Poverty-Economic-Possibilities-Time/dp/1594200459

2.  The Millennium Development Goals are a set of goals accepted by all nations of the UN, created at a global summit in 2000.  The first goal includes cutting poverty in half by 2015 (from its 1990 rate).  A large part of the MDGs includes international aid.  They have been of a major help in many 3rd world countries (particularly China and India)...however Africa remains largely unchanged.  It is extremely unlikely that any African nations will pass their MDGs in the next 4 years.

God doesn't always call the equipped...

but he does equip the called.  Which is good, because right now there is no way that I could accomplish the things that I believe that God wants me to do.  I, along with a group of other people, have been called to travel to Sierra Leone and employ our best talents in aiding the community there however we can.  As a group we will engage in community outreach through basketball, medical aid, giving out clothing and shoes, and straight up evangelism.  Its using our specific talents that makes things interesting.  Early in college I had a finance professor talk briefly about microfinance; a system to alleviate global poverty.  In listening to him I discovered my passion, and made it my goal to work in the field some day.  To that end I worked as a volunteer with Third Way Human Rights and Development in college (http://www.third-way.org/) and I gave spare money of mine and others to Kiva (http://www.kiva.org/).  For years now I have been talking up the power of microfinance to change the world, one micro loan at a time.

Now my time has come, which is exciting and terrifying at the same time.  I have the opportunity and the resources to get microfinance started with people who need it desperately,  but I have to be ready by the time we get on that plane to Africa.  This blog keeps track of my journey of getting prepared physically and spiritually, along with the minutiae of starting a non profit bank halfway across the world.  Stay tuned...and thanks for reading!


"Finally, my brethren, be strong in the Lord, and in the power of his might" Eph 6:10