The Idea of Microfinance
The idea behind microfinance goes something like this. People in rich nations have wealth. It often doesn’t feel that way to residents of rich nations because prices for goods and services and for living expenses in general are higher in rich nations. Take a few hundred American dollars (for example) to a poor nation, however, and you’ll find that they represent a vast sum of money, enough money to live like a king—or as it turns out, to fund a very decently sized startup business. One of the things most lacking in poor nations, as it turns out, has historically been investment in an entrepreneurial middle class—dollars flowing in to regular citizens to facilitate the creation and operation of small businesses, thereby to grow the economy of said poor nation and contributing just a little bit toward its desired escape from poverty.At the same time, the middle class in rich nations often finds that it’s not wealthy enough to successfully invest at home. When venture capital needs for a new business are in the millions and financial institutions want thousands just to open an investment account, a few hundred dollars of disposable income don’t really “buy in” to the investment game very well.
So, asks the world of microfinance, what if the two could be connected? What if we could help the middle class in rich nations to invest directly in the middle class startups of poor nations, where a few hundred dollars can mean the difference between a viable, long-term proprietorship and a lifetime of economic hardship and servitude spent trying to accumulate those dollars one cent at a time for decades?
eBay and Developing/Emerging Markets
eBay has long been an enabler of developing and emerging markets. For example, handcrafted and fair trade goods make their way to eBay from all corners of the world, often enabling entrepreneurs or even entire communities to use local arts and skills to generate income from a global community of buyers.If you really want to invest your disposable income, however, and really want to actively do something to support emerging economies, then just buying trade goods every now and then probably won’t quite fit the bill. If this sounds like you, eBay offers a more direct service—a microfinance investment opportunities community called MicroPlace.com. Founded in 2006 and purchased by eBay in 2007, Microplace offers web residents a way to make microfinance investments, generating interest on their assets while also helping emerging economies to grow.
How it Works
Using MicroPlace.com is actually easy. Upon visiting the front page of the website, you’ll find quick links to help you find investment opportunities according to a number of criteria that are often important to prospective microfinance investors under the heading “Find investments that matter to you” in the navigation area on the right side of the page.- Amount of good being done. View investment opportunities by the poverty level of those being helped by clicking “Poor,” “Very poor,” or “Extremely poor.”
- Financial return. View investment opportunities by the promised return by clicking “<2%” or “2%-3%.”
- Repayment period. View investment opportunities by the duration of the loan you’ll make by clicking “Anytime,” “<1 yr” (less than one year), “1-3 yrs” (one to three years), or “>3 yrs” (more than three years).
- Investment region. View investment opportunities by region by clicking on any of “Africa,” “Eurasia,” “Latin America,” “Middle East,” “North America,” “South Asia,” or “Southeast Asia.”
