Lending: the new giving?

Vietnamese hill tribe handicrafts

I live in Saigon, Vietnam, and it’s hotting up once more as we approach the muggiest time of the year.

Luckily, for me, this week I have been in Hanoi and luckier still, yesterday spent the day visiting local hill tribe communities about 180 kms north west of the capital.

Not only did the mercury drop down lower for the day, as we snaked our bus round the mountains through wispy clouds and potholed roads, but we were privileged to meet incredibly talented individuals, tucked away as they are from the life of urban Hanoians, and cut off from the collective consciousness of the world outside Vietnam.

The objective of the visit was as part of an expansion of an initiative in the UK that CARE International have built over the past four years, called Lendwithcare.

Local hill tribe community

The brainchild of CARE’s former marketing director, Lendwithcare set out to establish an online micro-lending community within the UK, whose members (or “lenders”) are able to loan money to individuals (“borrowers”) in the developing world, to help establish and grow micro-enterprises and small businesses.

The borrowers repay the lenders on a monthly basis, and once the loan is fully repaid the lender can re-loan the same amount back into the system, and onto a new borrower.

This lending cycle can continue for years, and support multiple borrowers.

Lendwithcare now has 17,000 lenders supporting nearly 8,000 borrowers in eight countries (Zambia, Malawi, Pakistan, Togo, Benin, Cambodia, Philippines and Ecuador) and the intention is to expand further.  65% of those lending have so far gone on to make additional loans.

Handicraft group – painting in beeswax

The initiative offers transparency – as a lender, you can track the progress online of the borrower in which you invest your loan – and also maintains an appeal to a range of audiences (in my family not only did I sign up to make a loan, but my father did also, as did two other family members of ours, both now in their 90’s).

The appeal is simple: Lendwithcare makes your money work very effectively and it also helps include up until now some of the billions of people in the world who are simply looking for the same things in life as everyone else.

As anyone who has ever worked will testify, there are times for all of us when the requirement of a loan to help us move forward are too pressing to ignore.

Growing up in the UK, I borrowed money from the bank to purchase numerous things, and the process to do this was typically quite straightforward (often too simple, but that point would require a separate post on the ways and wherefores of the banking system in the UK).

Duck and cow breeding

The plain reality for so many people living in Vietnam, and elsewhere, is that accessing any form of loan – even from family members – is often impossible, and typically those loans on offer might only be obtainable from individual (black market) money lenders, operating with high interest rates.

For the groups I met yesterday, most were made up of women, and they were fortunate enough to be receiving loans from a Hanoi based micro-finance institution (MFI), specialising in lending to remote communities.

And it is via MFIs through which Lendwithcare operates.  MFIs loan money to individuals, usually at favourably low interest rates, however many often lack access to regular and affordable capital, to be able to actively plan long term.

Through Lendwithcare CARE seeks to overcome this issue, offering MFI partners interest free capital as well as giving them small grants in order to cover administration costs, and support staff training.

It is CARE’s aspiration to help grow the outreach of MFIs in a way that also promotes positive social outcomes for borrowers. Which means providing loans not just to grow small businesses (such as breeding chickens and ducks, or selling handicrafts) but also loans to help install toilets and water pipes, loans to carry out house repairs, and loans to help train people in business development skills.

Every borrower we met yesterday could have added further items to their wish list.

Whilst micro-finance does not solve all the world’s problems, what it can do is help address the inequity of the current paradigm.

When I lived in Uganda in 1996, teaching English, the needs and wishes of those in the village I stayed were no different to what I saw and heard yesterday here in Vietnam (itself accredited with being a “middle income” country and economically vibrant after thirty years of positive growth).

In so many ways the world has changed since 1996.  Many of the hill-tribes in Vietnam have mobile networks, many have learnt new farming techniques to improve their yield, or had access to new markets to sell their handicrafts.  More children are attending primary school.

But much remains unchanged.

For many countries in a similar situation to Vietnam, economic growth has not been inclusive of all, and has not addressed issues of gender, nor exclusion for many people from accessing markets, information and resources.  As we saw again yesterday, women still do the brunt of the domestic and the labour work, and access to clean water and sanitation exists only for those households in each commune fortunate enough to have them.

So, is lending the new giving?

Time will tell.  Until then, however, why not take a look yourself at the Lendwithcare website today, and become a part of the potential answer.

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