The Mifos Project Makes Software To 'Accelerate Microfinance' (Video)

You think you have problems getting a bank loan? It's much harder for a small-town woman in Uganda or India. But Indian microfinance provider ASOMI has more than 50 branches and over 40,000 clients, and is an active Mifos user. The loans ASOMI makes are absurdly small by U.S. bank (or Indian bank) standards. Ugandans in the same "I just need a little bit of money to start (or expand) my business" predicament can turn to RedMutual Microfinance. And so on around the world, with the bulk of microfinance operators who use open source Mifos concentrated in S. and S.E. Asia and India. "But," you say, "I'm an IT person. I don't want to go into the microfinance business, and one of the little loans (often less than $100) they deal with wouldn't help me." True. But you can become a Mifos Specialist, which Mifos defines as "a consulting firm that provides technical support and consultation for microfinance institutions evaluating and deploying Mifos, and for ongoing use and customization." You won't get rich doing this, but it looks like there's a decent living (by Kenyan or Indonesian standards) in working with Mifos. They can use volunteer help, too. So check out Mifos and see if it has anything to offer you -- or if you have anything to offer Mifos. Either way, you can help poor people in poor countries become entrepreneurs and break the cycle of poverty that holds them down. (Alternate video link)

Comments

It's still debt

[popo]

Micro finance is indeed capable of a lot of good. But it's also still debt, and still carries with if all the personal (and macroeconomic) evils of debt. Non-performing loans in microfinance are still a major issue despite the claims to the opposite. The public-relations positioning of micro finance as "help for the poor" is a bit laughable as it can just as easily be construed as opportunistic bankers eager for new markets. Does it help society overall? That's questionable. All debt appears to help on a macroeconomic level at the beginning if the credit cycle.

On a larger level, debt is still tomorrow's demand, spent today. The notion that debt will always create a "virtuous circle" of ever increasing growth and demand has been proven wrong repeatedly by the credit cycle of booms and busts. A boom creates as many victims as it does beneficiaries, as rising prices burden those who do not participate in the game of debt.

Are there positive stories of individuals who make use of micro finance to build businesses and lift themselves out of poverty? Yes. But there is also debt which enslaves and burdens. Debt is debt. It's net benefits to society are zero sum, for all but the bankers.

Re:It's still debt

[mcrbids]

Debt is debt. It's net benefits to society are zero sum, for all but the bankers.

Which is pretty much bollocks. Debt is one of the most powerful economic tools ever invented, rivaling money itself. Like any tool, it can be used well, or poorly. It's basically never a zero sum game.

On a larger level, debt is still tomorrow's demand, spent today.

Sorta, but not really. Debt is a type of mutual bet made by the investor/banker and the beneficiary that the value of the assets purchased by the debt will exceed the value of the money the debt reflects. And most of the time, it works out, and everybody wins!

Let's say I need $100,000 to buy new injection molds for my business in order to build a product. Without the $100k loan, the injection molds never get built, and at the end of a year, you have $100k in cash still sitting in the investor's hand.

But if the injection molds get built, and the product sells, you have:

A) The investor no longer has $100k in his/her hand, but they have the debt, now somewhat greater than $100k. (interest)

B) The borrower has $100k in debt, offset by the value of the new injection molds, AND the profits made from the product created with the injection molds.

This scenario is a positive sum game. Personal debt is an entirely different matter.

Like before, you are making a bet with an investor, and it does sometimes work out for the positive, but consumer debts are typically used for things to consume. If you spend it on a house, a house can be built that wouldn't exist otherwise, so it's probably a good deal. If you spend the money on hookers and blow, you truly consume the money and have no assets to "win" on. Now you have interest due on the money, which is economic activity that won't happen. Money spent on interest is then NOT spent on "real" goods, and everybody loses. Even the lender loses some, as the overall economy is damaged, even if this loss much less than they gain in personal interest money.