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Microfinancing, Lending vs donating

Posted in Internet, Me, Politics by Homam Hosseini on November 29, 2009

I want to talk about what the brilliant idea microfinancing is.

I grew up in an Islamic family – however in my childhood they were not as conservative as they are now. It’s a tradition in Iran and I think it is also an Islamic rule to donate some portion of your surplus to poor people; usually the people you know from your work, or in the neighborhood. Currently in Iran there is a well systematic Islamic donation process, and I think people are obliged to donate one fifth of their yearly surplus to this system. And no matter where you are, we are all used to see charities everywhere and in different occasions (like thanks giving or new year). Just a disclaimer that I’m by far not an expert in this area, but I’ve always believed charities are not a solution to poverty, they make it worse, they distribute poverty. They keep poor people poor. If the poor person is jobless, donations don’t help him in getting hired, and if the poor person is receiving a very low wage, the charity doesn’t urge the employer to pay more.

During the past months there were times that I was finding myself dangerously inclined toward social ideas and then I was swinging back to ‘prosperity’ and capitalism. But this issue that you have to always start form some place bigger than zero to have a life in a capitalistic society had been bothering me. Now I think microfinancing is a reasonable solution for this problem.

Why do you want to donate to somebody and loose some money? Why don’t you lend him the money so he can start a business and pay you back? I understand that charities might be vital for some regions of the world, but I’m sure most of the donations that my family is doing in Iran will not be used in those regions.

‘Carlos needs $1,100 to buy some pigs’ he will return the loan in a year, but no bank is lending him, simply because the cost of processing the loan is higher than the profit. But this website: www.kiva.org is making it possible for Carlos to raise the money in a matter of a week. Carlos will not be another homeless beggar, he is starting his own business and his future depends on how hard he works and how well he manages the business. He will not need charity and in a few months he should be able to even hire employees and extend his business.

I was impressed that my like-minded people are among the top lenders of Kiva. Yeah! I think superstitious people have a hard time digesting this idea that they, not God, can help people to stand on their own two feet and overcome poverty. And of course the LGBT community that are helping their entrepreneurs to achieve their own equality.
That’s pretty all I wanted to say, I have something beautiful to think about tonight.

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