Dragons Den for the Developing World

The Geezer · 26 Feb 2014 at 14:08

I suppose it's all down to the risk and security lenders are willing to accept for me I like the idea of making a difference and having a choice of what cause I back.

We could call these microfinance organisations co-ops which seems less inflammatory.

Our company has given us the first $25 and I'm going to bang in another $100 and see how that goes

deuse · 26 Feb 2014 at 15:07

http://www.kivafriends.org/index.php/topic,918.0.html

"it says they are charging over 50% interest"

I say it's a scam.

pitchfork · 26 Feb 2014 at 15:11

Always been a big fan of microfinancing as a means to end poverty and this is a fantastic addition.

Burnsy2023 · 26 Feb 2014 at 15:11

deuse said:
http://www.kivafriends.org/index.php/topic,918.0.html

"it says they are charging over 50% interest"

I say it's a scam.

It's a high interest rate and that is concerning, but I don't see how that equates to a scam.

deuse · 26 Feb 2014 at 15:18

Burnsy2023 said:
It's a high interest rate and that is concerning, but I don't see how that equates to a scam.

Were do all the interest payments go? or do they just award themselves a BIG bonus. Just another way of making money.

I think we call them loan sharks in the UK

thep02 · 26 Feb 2014 at 15:18

Burnsy2023 said:
It's a high interest rate and that is concerning, but I don't see how that equates to a scam.

Agreed, it's concerning me but I'm not calling scam on this evidence, I would much rather it was below 7% though, I don't want some london administrators getting 100k salaries off my efforts to help a guy buy a yoghurt churn. I'd love it if a proper bank provided the admin free.

Burnsy2023 · 26 Feb 2014 at 15:25

deuse said:
Were do all the interest payments go? or do they just award themselves a BIG bonus. Just another way of making money.

I think we call them loan sharks in the UK

Have you read the thread linked to? It does give a reasonable explanation.

The partner organisation may have a large number of defaults and therefore that risk needs to be factored into the interest rate for everyone.

The Geezer · 26 Feb 2014 at 15:46

Here's another quote from the thread that resonates with me:

If banking with the poors made the bankers "rich and fat", the big established banks would have been in this market for a long time. The decision makers in these banks have all the information, intelligence and capital needed, and they stay out. Isn't that enough proof that the business isn't yet profitable?

deuse · 26 Feb 2014 at 16:06

Burnsy2023 said:
Have you read the thread linked to? It does give a reasonable explanation.

I've linked to their forum so........fat cats making money from silly people.

gjrc · 26 Feb 2014 at 16:13

so the bank charges interest and makes the money, whilst the underwriters (you, me and bend over and take it up the jacksee) get nothing but a warm feeling that we are helping "the poor people of the world"

nice business model!

Storm3y · 26 Feb 2014 at 16:20

After reading the last few posts this has started to put me off. Surely a better model is to cut out the middle man and let people directly loan to the people.

That way the chaps in the middle aren't raking in huge profits from interest payments which none of us see. I personally wouldn't want to charge any of these people huge interest rates to borrow my money as I trust they are going to be using it to better their life.

I've got no problems with making money lending to some fella on Zopa who wants a £100 to buy a new phone or xbox because he can't be bothered to wait and save.

dowie · 26 Feb 2014 at 16:35

Sounds dubious... 'no costs' is total BS for something like this... there are very obvious costs and someone is able to absorb them... seemingly a partner organisation.

Who is the partner organisation, who runs it and who controls the not for profit org...

If they'be got such a low default rate yet are charging large amounts of interest plus have already leant the money (ergo already have the funding)... all they're asking for is a bunch of chumps to accept some risk in return for no return other than some pics of a happy looking ethnic farmer person you can feel all warm inside about helping...

Maybe it is all above board... would need a bit more info/transparency to establish that... at the mo I'd be very skeptical

Hades · 26 Feb 2014 at 16:38

I wouldn't mind doing it for no profit and still having risk. But on the face of it this looks like the lenders take the risk to underwrite the bank so they can make a profit from the poor. I'm ooooot...

Maybe I've misunderstood though.

Storm3y · 26 Feb 2014 at 16:40

Probably is above board. It's been around for a good few years. Here is the list of 'Field Partners'

http://www.kiva.org/partners

Burnsy2023 · 26 Feb 2014 at 16:41

deuse said:
I've linked to their forum so........fat cats making money from silly people.

Do you read any of my posts or do you deliberately troll?

cheesyboy · 26 Feb 2014 at 17:21

Storm3y said:
After reading the last few posts this has started to put me off. Surely a better model is to cut out the middle man and let people directly loan to the people.

That way the chaps in the middle aren't raking in huge profits from interest payments which none of us see. I personally wouldn't want to charge any of these people huge interest rates to borrow my money as I trust they are going to be using it to better their life.

I've got no problems with making money lending to some fella on Zopa who wants a £100 to buy a new phone or xbox because he can't be bothered to wait and save.

The administrative costs on lending £20 to someone with a formal loan are probably going to be very high in percentage terms. Even printing 10 sheets of paper will cost £0.60 - that's 3% right there.

deuse · 26 Feb 2014 at 17:23

Burnsy2023 said:
Do you read any of my posts or do you deliberately troll?

Originally Posted by Burnsy2023 View Post
Have you read the thread linked to? It does give a reasonable explanation

Originally Posted by deuse View Post
I've linked to their forum so........fat cats making money from silly people

As I found the thread there and read it and posted it here and members here agree with me. It seams that you're the one trolling.

I think you need to get out more or a hobby?

dowie · 26 Feb 2014 at 20:46

The Geezer said:
Here's another quote from the thread that resonates with me:

If banking with the poors made the bankers "rich and fat", the big established banks would have been in this market for a long time. The decision makers in these banks have all the information, intelligence and capital needed, and they stay out. Isn't that enough proof that the business isn't yet profitable?

Click to expand...

Doesn't resonate with me tbh... high interest loans can be (inherently) very profitable, doing lots of small loans like this requires a different business model and it isn't necessarily going to operate on the scale banks tend to like. Despite that I'm pretty sure the people behind the likes of Wonga do rather well and are quite profitable.

Storm3y · 26 Feb 2014 at 20:54

cheesyboy said:
The administrative costs on lending £20 to someone with a formal loan are probably going to be very high in percentage terms. Even printing 10 sheets of paper will cost £0.60 - that's 3% right there.

Would be interesting to see what administrative costs are involved with these types of loans.