The Piggy Bank Has Arrived

Well, this weekend my piggy bank from Microplace arrived and I am obvious very excited. This little guy was hand crafted by Lucia Valdez at the Comparte workshop in Pomaire, Chile. I did a little sniffing around the Internet and found that you can in fact get your very own piglet at Ten Thousand Villages, which offers products from some thirty artisan groups from Africa, Asia, and Latin America.

Frankly I have no idea what I did for Christmas gifts before I found this website. Where else are you going to find a bicycle gear picture frame? An alpaca/acrylic button cape? An owl gourd box? I couldn't find much out about them besides the information on their own website, although I did find this article. Anyway if you were wondering where to pick up that jacquard silk/pashmina scarf look no further.

MicroPlace, Parte Dois

Armed only with my rapier wit (and a little help from Google Translator) I once again ventured out into the world of international microcredit investing a la MicroPlace. So far I have been mainly looking at MFIs operating in countries in which Kiva does not have any field partners. Today I started out by looking at AE&I (Afrique Emergence & Investissements), an MFI that operates in Cote D'Ivorie but passed them up after finding out that Kiva had some rather unfortunate dealings with them. So I moved on to Banco da Família (website in Portuguese) which operates in the southern states of Brazil. Banco da Família seems to be doing so pretty good work and won the 2006 Certificate of Transparency from the Mix Market, which is kind of the de facto clearing house for microfinance information (I'm sure we'll be revisiting the Mix Market on another blog post).

Personally I find trying to wrap my head around the poverty levels in South and Central America has always a little tricky. The poverty in Africa, the region that I think requires the most help by far, is obvious to the point where it basically punches you in the face, proverbially speaking. A lot of South and Central American countries have decent per capita GDP numbers, but this hides some pretty massive wealth discrepancies. For some reason, it's almost impossible to find median GDP numbers for any country even though that would seem to be a much more useful number. There are some ways to measure wealth discrepancy though, the most popular is probably the Gini coefficient. Gini coefficients vary between 0 and 1, with zero representing perfect equality and a 1 indicating that a single person has all the wealth. Real life coefficients range around 0.25 for the Scandanavian countries to 0.70 in a few countries in sub-Saharan Africa. The U.S. has a rather high coefficient around 0.47. Brazil's Gini coefficient is a whopping 0.59 which is one of the highest outside of Africa. So, although Brazil's per capita GDP (PPP) is around $9,500 it is important to keep in mind that this amount is very unevenly distributed.

Anyway that is enough econo-nerdiness for now. My $250 is on its winding way to Banco da Família. This note is offered by Oikocredit, a major microcredit financier based in the Netherlands who is the other intermediary on MicroPlace. Now that I've invested $500, you will soon see a post detailing the awesomeness of my handcrafted artisan piggybank from MicroPlace.

Microplace: Putting My Money Where My Mouth Is

I've been on Kiva for some time now, but today is my first investment at Microplace. Now, the Microplace versus Kiva debate could go on for several blog posts but I will just give a brief explanation of Microplace for now. Unlike Kiva, Microplace is a for-profit company registered with FINRA. I don't think they actually turn much of a profit, but since they are a subsidiary of eBay it's pretty hard to actually get any detailed financial information on them. Since they are registered with FINRA, they have more flexibility than Kiva in regards of paying a return. Investments purchased are securities called 'community notes,' which basically walk and talk like a certificate of deposit with returns between 1% and 3% with terms between six months to four and a half years. That's not a fantastic return, basically equal to inflation, but with the Reserve Fund breaking the buck and the current market toil, putting some money into a sector that is rather uncorrelated to the market might not be an unwise decision anyway. While loans through Kiva generally have a low default risk, investments through Microplace have close to none since they are generally obligations of the issuer of the security (Oikocredit or the Calvert Foundation) and are not tied to a specific borrower or MFI. If you're interested in learning more, you should check out their website.

While Kiva presents actual borrower profiles, you have to do a little more investigation into the MFIs you want to lend to. Although I'm sure that Oikocredit and Calvert have done their own due diligence, personally I am a bit leery about lending money to an MFI that I can't get any information on because they don't have a website. After some digging around, I am going with a $250 loan to Asmitha Microfin Limited, based out of Hyderabad, India, for 1.25% for nine months. They seem to have their act together and were ranked 29th in the world out of 641 MFIs by Forbes magazine. If that wasn't impressive they don't just have a motto - they have five of them. My personal favorite is "the gusto to outshine," although "the inclination to betterment" was a close second.

It's not much but it'll help me figure out more about how Microplace works. As my little loan progressives, I'll be sure to give you inappropriately frequent updates on it.

Bonus: if you invest $500 on more you get a handcrafted artisan piggy bank. Talk about incentives people!