Tuesday, March 27, 2007

Private Aid Through Private Micro Credit

Real sustainable development

There has been some buzz lately about an internet group which packages small loans for small-scale entrepreneurs in places whose post-imperalism or central planning states (often the same places) have not allowed the creation of the financial markets, court systems and rational, not overly protective, regulatory regimes to give small-scale financing. www.kiva.org.

Alot of the reason for private lenders not being able to go into the small-scale markets before is because "regulation" has protected competitors in bank lending. Then so the mainstream (government protected) banks didnt need to expand their markets to more risky more costly areas. It has taken the innovation allowed by the internet to break this (and so many other) fetters towards progress.

The big buzz and big think awards go to the most famous - and government funded - micro lenders. But the real sustainability, through the profit motive, is in the private markets.