User:Mokurai/Microfinance

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Microfinance has had a huge impact on poverty by helping people to escape crushing interest rates from moneylenders, and to start various kinds of business. One of the most effective is the telephone lady business, in which a loan is given for a mobile phone and an account for using it, and the owner rents it out to the community. When Grameen Phone and Grameen Bank created this program, they found that villagers previously living on a dollar a day could earn something like $900 a year just be renting a phone. Fairly soon, however, people who were renting the phone for purposes that made them money were able to buy phones of their own. Although this has cut into the profits for the original phone lady, it has validated the village telephone market to the point where many commercial phone system operators are building their networks out to the villages in expectation of sustained profit.

In the process, both Grameen Phone and Grameen Bank became profitable, able to finance further growth with conventional investments for the phone company, and member deposits for the bank. Once the formerly poor have paid off their first loan, and can save, bank assets available for making loans increase much more rapidly than the interest rate on loans.

The same principles apply to computers and Internet, only more so, because there are so many more ways to use a computer to make money, in e-commerce, in buying agricultural supplies and selling crops, and in general being able to communicate with customers and suppliers. With the XO in schools, we now see opportunities for a variety of local and outsourced IT services, including software development, Web design, localization, data management, and more.

Earth Treasury is seeking microfinance partners to place electricity generating and storage equipment in villages, and Internet networking, both to support schools and to sell the surplus power and bandwidth to the community, and then to look toward further opportunities that the earlier rounds enable.