This is pretty big news. Kiva has been the only option for individuals who want to invest small amounts of money into micro-entrepreneurs around the world. However, it’s a non-profit organization, so the investor cannot actually make any interest on the money lent.
MicroPlace is a new peer-to-peer lending platform backed by eBay that has gone through all the necessary SEC regulatory hoops that make it possible for investors to invest in these individuals and make a return on their investment. It is made primarily for the US market, allowing individuals to loan as little as $50.
For those of us who keep calling for more ways to allow investment money to flow into entrepreneurs hands in Africa, this is a great thing. Personally, I’m glad that an organization the size of eBay was able to muscle their way through the US financial regulatory system in order to put out a platform that allows true investment. Whether or not “real” investors want to get involved in P2P micro-lending, and the inherent risks found in fluctuating currency rates and micro-lenders and -borrowers.
Looking more closely into the opportunities in Africa, I found a total of 4, all offered by the Calvert Foundation. Among them are opportunities with micro-finance institutions in Nigeria, Kenya, Tanzania and Ghana. All of the interest rates are set at 2-3%/per year with a 3 year maturity. Impressively, these 4 organizations manage $72 million, but impact a startling 340,000 active borrowers.
Honestly, I’ve been critical of some of eBay’s efforts around the world before, but not this time. This is an excellently designed site, great functionality and one that fulfills their mission.
More reading:
- BusinessWeek has a really good article on MicroPlace.
- Rob Katz at NextBillion gives a good overview of the differences between MicroPlace and Kiva
