Dude, it takes $25 to make a loan, and we have $24.60. Guess I'll let you know next month...

Done and dusted...

First off, thank you to everyone who came to share in our special day. Even though we each only got 6-8 hours of sleep total from Friday morning to Sunday night, we thoroughly enjoyed the event and hope you all did as well. The Caribbean trip was awesome; a much-needed reprieve from past month or so. If you haven't yet seen, Debbie has posted many of the pictures from our trip on Facebook.

Now that's taken care of, back to business. Kodzo's been paying back the microloan ahead of schedule and as such we've already made back the $25 minimum required to lend. In the spirit of the this exercise, we'll be cycling the money back into another microloan. As interest has waned some (we're not so brazen to think that people will follow this wedding favor blog long after the wedding itself), this first recycling of the loan will be made IAW the preferences expressed in the previous polls; i.e., African agriculture. The polls have been placed to the right again...please feel free to vote for where the next $25 (or more) will go. >>>>>>

For this loan, we again chose an entrepreneur in Togo. His Kiva profile is as follows:

"Abraham Sewonou est un homme de 38 ans, marié et père de 2 enfants. Il réside à Avetonou, un village situé à environ 100 kilomètres de Lomé, la capitale togolaise. Il est un éleveur ; avec ce crédit Abraham souhaite acheter des cabris, des porcins et des ovins pour agrandir la taille de son cheptel. Les bénéfices qu’engendreront son activité lui permettront de mieux prendre en charge sa famille et dans l’avenir construire sa propre maison."

It's been a solid ten years since my last French class, and as Madame Kina will undoubtably attest, I was not the meilleur etudiant. However, I'm pretty sure this says something along the lines of "Abe is a 38 year-old married man with two kids. He lives in Avetonou, a village 100 KM outside of Lome, the capital of Togo. He is a breeder by trade. With this loan, Abe hopes to buy goats, pigs, and sheep to increase the size of his flock (?). He hopes the benefits of this loan will allow him to earn more for his family and eventually build their own home." For all I know, that could say he's raising livestock for blood sacrifice, but I think I'm somewhere in the ballpark. It's through the same field partner that funded Kodzo (who've yet to be defaulted on after over 1000 entrepreneurs and $850,000 lent), so we're pretty comfortable with this loan even though this doesn't cover any shorts that may arise from currency devaluation.

So, stay tuned to stay abreast. The polls are open for where the money is going next. We'd like to toss some ducats to an entrepreneur in the Caribbean after having seen some of the hyper-poverty that exists on some of the islands. Even those with thriving tourism economies were fairly destitute outside of the major cities. This is your show, however. We set this venture up to lend the $100 wherever our friends and relatives would like. Make sure to let us know if there is a region or sector not listed in the polls by putting them in the comments below this post and we'll be sure to check them out.

Until next time...

$22.82...

We're up to $22.82 now, just $2.18 from being able to lend again. At this current rate of repayment, we'll have the requisite $25 before school starts up again in the fall.

Being only eight days away from the big show, we'd like to thank all of those who've been following this blog and contributing votes, comments, etc. It's been a rewarding experience researching the countries and entrepreneurs involved in Kiva and we look forward to doing it again upon returing from our honeymoon.

Any suggestions of where we should be looking? Want to see a reinstatement of the weekly polls? Let us know in the comments section!

Up to $15.06!

Best $7.46 I've ever earned...

The money's starting to come back in; ahead of schedule, no less! We have $7.46 in the account after the first payment had been received by the field agency. Once we hit $25.00 we'll search for another entrepreneur.

Psssh....hey, come here....

Hello all, I wish to make an addendum to our gift registry. As you may or may not know, I've taken quite a shine to rugby union. I've been searching online, and no sites seem to offer a registry for rugby gear. I figure it would make sense, as money spent at this location is equivocal to money not spent to make on my ER co-pay. Thus, I am adding a semi-official list to the registry...body protection for me. Gifts purchased here will (hopefully) keep my ass out of the emergency room. I am partial to Gilbert, although Canterbury (CCC) makes a quality, albeit expensive, product.

By the way, don't tell Debbie...she doesn't really approve of me playing in the first place. :)

PS: I don't have anything with a cup in it, either...FYI.

It's done...

Well folks, Debbie and I would like to thank you for your contributions and support. We still have a little over three months before the wedding, but the favor is actually in action right now. Let's briefly recap, shall we?

First, Debbie and I posted about the rationale behind choosing microlending over bubble-blowers, Hersey's Kisses, and the like. Also, we put a poll on this blog soliciting your contribution to the process. We were stunned by the number of views the blog had and by how many of you cast votes in the poll. Overwhelmingly, you chose that we lend to Africa's agriculture sector. In tandem with the next post we put up a poll asking which country appealed to you the most. Togo, by the narrowest of margins [one vote], edged out Senegal and (surprisingly) Mauritius. Here's where it comes off the tracks a little bit. Debbie and I sat down this evening to choose an entrepreneur using the criteria you all voted for in the polls, but unfortunately no more Togolese were seeking loans to aid in agriculture development. In fact, as of 1:00 AM Sunday morning, no entrepreneurs in Africa were seeking agriculture loans. Thus, in accordance with our contingency plan, we chose an entrepreneur that most resembles the criteria you all specified. That individual is...


Kodzo Adzaho of Wome, Togo

Mr. Adzaho's Kiva profile:

Kodzo Adzaho, age 30, is married and the father of one child. He owns a grocery store in Womé, a village located northwest of Lomé, the capital of Togo. His business is doing very well. With this loan, he wishes to resupply his store in order to meet customer demand. He counts on this opportunity to improve the standard of living of his family.

Sure, this individual isn't a farmer nor a herder. But, without Mr. Adzaho's business, many of the Togolese living in Wome would not have access to the products he stocks. Further, the loan he's requesting is to be used to supplement his retail business, fully in-line with the libertarian underpinnings of this project. Mr. Adzaho's success is now in his hands, and we wish him the best of luck. Kind of makes you feel like a venture capitalist, doesn't it?

Being said, I hope you'll continue to follow this blog as we follow Kodzo's progress. We'll keep you in the loop with his fundraising, use, and repayment status, as well as any posts the Kiva field partner forwards on about this enterprise. Also, I'd like for you guys and gals to look into microlending, too. At Kiva, you can start for as little as $25, and you stand an excellent chance of making all that money back. There is also Grameen, Unitus, and many others. Please consider it.

The people have spoken!

I must admit, I had different goals in mind for this post. I figured I would look through the available entrepreneurs, copy links to the top five, and make a poll to the right like we had before. I queued up about 15 potentials in the tabs. As I was wrapping up the first person's section, I refreshed to make sure I had their stats as up-to-date as possible. In the half hour since I had originally opened that tab, this particular person had $225 raised for their cause. That led me to think that posting about the entrepreneur prior to the actually lending the money is might not be the best idea, as many loans are fully raised within a couple days. However, since this is an interactive experience, I didn't want this to be completely unilateral. Therefore, I'll break it down into the countries that are most popular using the criteria you all provided in the polls last time. Again, there is a poll on the right to suggest which country you would like us to lend in.

So, without further adieu...

THE STATS

-As promised, $100 has been put into our Kiva account.
-78% of those casting votes suggested that we lend in the AGRICULTURE sector.
-89% of those casting votes suggested we lend in sub-Saharan AFRICA.

So, sub-Saharan agriculture it is. At a cursory glance, here are the countries that seem to be seeking the most agriculture loans.

1. Togo
2. Senegal
3. Mauritius
4. Uganda
5. Nigeria
6. Zimbabwe -DQ'ed

ABOUT THESE COUNTRIES

You didn't think this post would be free of the dry, educational section did you? Come on, you have to admit most people haven't even heard of some of these countries. The most popular two are only recent in peoples' minds do spam e-mails and "The Last King of Scotland." I'll keep this short, but it is good to know this information.

TOGO

Togo's an improving country. Well, it was. Its urban centers (well, I guess Lome is the only large city) are blighted with the same problems as any large city in regards to crime. AIDS is also fairly prevalent here, as with most of the region. Togo never really took off economically, despite them having a passable democracy until 2005. Their exports are pretty poor, and much of their laborers work in subsistence agriculture. I guess this is where we can come in and make a difference. Even efficiency here can lead to better trade outlook for the country, leaving them less reliant on imported staple foods. Again, I'm no economist; I only read the magazine. Seems to make sense, though.

Besides, Emmanuel Adebayor is from Togo. That's all the convincing I need.

SENEGAL

We're pushing the limits of "sub-Saharan" here, but Senegal came up many times during the search. For a post-colonial African country, Senegal's democracy is probably in the top five. Likewise, the economy is comparatively strong since it de-pegged their currency from franc. Unfortunately, only the better-developed parts of Senegal enjoy this success. Basically, just Dakar and the surrounding areas. Minor crime is an issue, but they don't have machete squads like Togo does. Again, much of the outlying areas are supported by subsistence agriculture.

MAURITIUS

I was completely surprised to see a Mauritian seeking a loan. I thought it was Mauritania originally, but no. First, Mauritius is absolutely beautiful and therefore has a thriving tourism sector. I tried to convince Debbie to let us honeymoon there, but the flights were about $3k apiece. Second (and logically following), it is hyper-westernized. Tourism and finance are (were?) its top sectors, mostly international companies with business interests in S/SW Asia. I don't know what's up with that now; maybe this is why they need outside lending. The CIA World Factbook says that agriculture only makes up about 10% of the GDP. I wouldn't be opposed to lending here, but I think that it may be against the spirit of this venture. If you guys wish to stimulate the Mauritian economy, buy the two of us those plane tickets and we'll take care of the rest. :)

UGANDA

Like I said, most of those who know anything about Uganda is that Forest Whitaker won an Oscar for playing Idi Amin. If you've seen the movie, you have a decent appreciation for just how bad Ugandans have it. This country is POOR. Desperately poor. Probably doesn't help that they've been under despotic rule for so long. Their current president has been in power since '86, and seems to be doing a good job keeping the dirty laundry out of the open. Being said, they're still poor. They probably have the IMF on speed-dial, having received bailouts and debt reliefs before it was popular. Decent natural resources, but these are controlled by the government or by foreign companies paying the government. If you haven't surmised, the Ugandan government doesn't do the best job at maintaining the welfare state. Subsistence farming is popular, and this is probably were money loaned in this nation will end up.

NIGERIA

We've all gotten the e-mails. Sadly, this is modest part of the Nigerian economy. Apparently they've been cracking down, but my inbox seems no better off. Truth be told, I feel bad for Nigeria. They were bootstrapping out of stereotypical African super-poverty with oil and resource exports, but in this current climate one can guess how they're fairing. The government is largely ineffectual, as evidenced by their inability to combat even the most banal of cyber-crimes. The military is the true voting body, not the citizen. I'm done, but read more at the Economist if this interests you at all. The first article (Rebranding) is pretty telling. Nigeria has rampant poverty, and hopefully a loan lent here will find its way to those in need and not the predatory confidence trickster.

ZIMBABWE

When this name appeared, I couldn't help but laugh. Money going into Zimbabwe isn't safe, nor practical. Very few Kiva field agencies led here, and those that do have terrible ratings. Human rights abuses and rule by dictatorship notwithstanding, their economy was destroyed all the way back in 2007. You may remember hearing about this, the five million dollar loaf of bread? Well, it's gotten much worse. Just for laughs I ran a currency conversion on the US dollar to the Zimbabwean dollar. Currently, $1 gets you Z$366. This is after a *cough* redenomination of their currency notes by multiplying their by ONE TRILLION in February! Simply put, their one dollar note is basically their old 1 trillion dollar note (not that such a thing existed). Can you imagine walking into McDonald's and having to pay Z$366,000,000,000,000.00 for a small fry? Hyperinflation is only one of their problems, the others being persecution of political dissidents, rampant governmental corruption, and squandering of what little GDP the country generates. To be sure, Zimbabwe needs help, but a $100 microloan isn't going to cut it. This is an interesting counterfactual to those who get pissy when the USA removes despots.

So, there you go. Before you leave, please vote on in the box to the right. We're eagerly awaiting your responses!

DISCLAIMER:
The country selected may not have entrepreneurs searching for loans once the poll closes. In this event, we select an available country that most resembles the the one suggested.

Introduction

Hello everyone, thanks for coming to the official blog of Debbie and Derek wedding favor, a microcredit loan through Kiva. I know this may seem a bit unusual, but read on...I think you'll see what we're getting at.

Rather than traditional wedding favors like trinkets and those bubble things, Debbie and I decided to opt for a charitable donation. Unfortunately, the disagreement came when it was time to decide which charity to donate to. Getting a libertarian criminal justice student and a self-identified "moderate" (who just graduated from the 1) University of Michigan 2) School of Social Work...just saying) to agree on what constitutes a worthy cause is a fool's errand. She suggested charities such as Help the Poor, Pandas, and Puppies and The Human Fund (see above), while I suggested my own two charities, Down with Dance Marathons and The Derek Cohen Food Pantry (all proceeds going directly to stocking the kitchen with nutritious Hot 'n Ready pizzas, crispy fish fillets, and Keystones Light). Needless to say, a consensus could not be reached.

However, back in 2006 I remember catching a news story on Muhammad Yunus, whose Grameen Bank (and subsequent lending project, the Grameen Foundation) pioneered the ideology of microcredit as a free-market intervention into poverty. Dr. Yunus, along with the bank, had just been awarded the Nobel Peace Prize "for advancing economic and social opportunities for the poor, especially women, through their pioneering microcredit work." I was floored by the concept...not only in its altruism but in its simplicity.

I brought up the possibility of rather than donating to a typical charity, we could put the donation money into an account at one of these institutions. Although she and I had spoke of giving to a charity like this at some time in the future, it was never really at the forefront of our thoughts. Now, we had not only the means (as scant as they may be) but the motivation to donate as well. It is our hope that you, through our experience, might also be motivated to make a similar loan. Leading up to the wedding, I will be covering the [very] basics of microcredit, walk you through our rationale of choosing a borrower (or borrowers), and sharing any success stories that will be send via the lending institution.

Speaking of which, the chronology of the blog will be as follows:

1. Introduction: This post. I'll include a very brief explanation and FAQ for this whole shindig.
   
2. Confirmation of the deposit being made with Kiva. Currently, we are planning to use $100-$200.
3. Sharing information about the borrower. I'll have to check into specifics as to what's all permissible, but at the very least will contain the location, purpose, and amount of the loan.
4. Sharing updates as they become available.
5. Hopefully, at the end, declaring that the loan has been successfully repaid.

Not-yet-asked [but you were probably thinking about it] Questions

"What is microcredit?"
-Microcredit is, very simply put, localized small, short-term loans made to the poorest of the world's poor. These loans are extended to these folks through a lending institution specializing in this sort of finance. Oftentimes, monies loaned through microcredit are spent on entrepreneurial business expenses such as patching a fishing net or maintenance of boat. A borrower may be in almost any sector, including commercial. In regards to the loan itself, the institution offers competitive terms and mentorship to enable better rates of repayment.

What happens if and when a microcredit loan is paid off?
-To be honest, it's not really that big an "if." Kiva's default rate is something around 2.5%, [economy reference deleted]. When a loan is granted, the borrower is held to payment schedule with interest much like in a loan coming through a commercial bank. Economists attribute the high success rate of these loans to their relatively small size, the informality and proximity of the local economy and institutions, and the industrious drive of those who seek out these loans. Once a loan is repaid in full, the money will be added back to our account on Kiva.org. At this point, we can re-lend it, donate it to Kiva for operating expenses, or withdraw the money and be remunerated. In the spirit of this venture, the last option is off the table. As for the other two options, it will depend on the life of our first loan. If it is repaid in full and fairly quickly, we will gladly reinvest it. If we only recover part (Kiva has minimums) or it takes too long (comps in late summer before the wedding), we'll probably just donate it to Kiva.

Isn't there a service charge to move money like this?
-Nope, at least none to us. Kiva's partnered with Paypal and other key business to move our money. 1) We pay Kiva via Paypal 2) they pay the institution 3) the institution lends it to who we chose 4) they pay back the institution 5) the institution pays Kiva via Paypal. The lending institution is paid for their service through the interest on the loan and [in practice] has no claim to the actual principle.

So, really, why a microcredit loan?
-Aside from getting me out of having to pick out table favors? Wait, the irony is that in the time it took me to do all these websites, blogs, etc, I could've done that. But in all serious, both Debbie and I feel strongly about this process. Those of you who know me will remember my epic Dance Marathon dissents from undergrad. There, my complaint was three-fold: 1) access, 2) effectiveness, and 3) mindlessness. First, only a small segment of the US's "sick kid" population would benefit from Children's Miracle Network (there are some class debates to made here too, but that's not my style). Second, the massive overhead involved in running a Dance Marathon means less money to said sick kids. Think if all the "in-kind" donations could've be monetized for DM more efficiently? Finally, there are the dancers, morale captains, and the list goes on. During my time I met a handful of genuinely caring individuals (albeit misguided), but the grand majority were the people doing it socially, or for their fraternity/sorority, or as a resume item due to its immense scope. Half of the people didn't even know how CMN's funds were processed. Dance Marathon was, by all definitions, indoctrination. The minority dissent was labeled sick kid haters.

Kiva, and like institutions, are the polar opposite. Regarding access, it directly seeks to make these funds available to those who have the least access to conventional banking. Effectiveness? If a 97.5% success rate on all monies being repaid isn't success, then I don't know what is. Secondly, to facilitate this lending, Kiva must run a pretty lean ship. The vast majority of the money moving through Kiva doesn't benefit the organization at all, unless the lender decides to donate after it's been repaid. Very low overhead. Finally, to be a microlender, you can't just log on to Kiva and send $25 to the first person you see. Wait, strike that...you can. However, this is your money. Kiva makes available all the tools necessary to research both the borrower and the lending institution. You are ultimately responsible for who benefits from your charity, and have all the information you'd need to make a quality decision at your fingertips. There is no indoctrination.

Finally, we both like Kiva because, as I mentioned before, it is not a handout. It provides no more than the opportunity to succeed to the entrepeneur of your choosing. They still must use that money wisely and repay the loan. Sure, some loans go unpaid. These are unsecured loans, however, and Boris isn't going to go down to Osijek to take Natasha's sewing machine. The onus for success is on the individual.

"I heard that microcredit is usurious, exploitative of women, and doesn't do squat for the local economy. What say you?"
-I would say you're an ignorant hippie who fails to look at the big picture. I'll address these points individually, if you can pause your New Yorker podcast for me:

1. Usury - It is true that, compared to western terms, microcredit interest rates are fairly high. However, one must also consider the small size of the loan and all it takes to get the dollars from my Paypal account to the backwaters of Sierra Leone and into the hands of a borrower. Most interest rates are between 12% and 24% (1). However, this is still better than the alternative of the village money lender. Think Don Tattaglia from the Godfather.
   
2. Exploits women - Operationally, no. It has been found by watchdog organizations that handful of women loan applicants were used as fronts to procure microcredit for their husbands only to be excluded from the business process. This occured mostly in middle to north-eastern Africa, where women's rights aren't exactly inviolate. Do note that, although these loans are vetted for fraud, occaisonally an unscrupulous individual slips by. Conversely, women are the largest segment benefiting from these loans, oftentimes being required to contribute to supporting a family or sending children to school. (2)
3. Ineffective - Hold on there, Robert Martinson. Before you leap, do you think I would chose a modality on common sense and principle that wasn't effective? What do you think I am, a social worker (sorry honey, I love you!) or school administrator? Well, to be entirely honest, it very well might not be. Despite being conceptualized in the 70's, widespread microlending is a very recent phenomenon. Kiva itself was just founded in 2005. Therefore, macroeconomic studies of serviced areas are short-scoped and rare. I only found one that studied a village recieving a wopping total of three loans and followed up in a year. This, my friends, was the most empiracly rigorous study available. In time, microlending may prove to be a bust. As for right now, it produces excellent qualitative, anecdotal outcomes and (based on my incredibly limited knowledge of economics) stands to only benefit an area by brining in localized affluency. Only time will tell.

Makes sense, I guess. Why Kiva instead of Grameen, Unitus, etc?
-Kiva was the first organization I found back in '06 when I started looking into it. Kiva also has been made from the ground-up to include social networking capabilities. Is this a "Hey, look how good a person I am!" feature? I don't know. It does, however, make it incredibly easy to do stuff like this and share our progress with you folks. As for the others, well, to be honest I have minor misgivings. This is my personal opinion and is completely unsubstantiated by evidence and I would recommend if any of you wish to do the microcredit thing that you do your own research. Grameen has its roots as a commercial bank and I can't shake that the foundation, although the first of its kind, was more of an afterthought. Unitus I feel is too ideologically driven. Not that there's anything wrong with working hard for what you believe in, but I prefer an approach that is free of ideology and is primarily lender-driven.

So, honestly, does microcredit "really work?"
-Lack of empirical results notwithstanding, I would say it does. I'm not an economist, and to date have take only one graduate-level stats class. However, even if the accounts I read are the entirety of microlending successes, I would still believe that this is an effective method for alleviating poverty through others' endeavor. Worst-case scenario, we're giving a personal donation to someone who tried their hand at entrepeneurship and failed.

Read the first article in the references if you have lingering doubts...as LaVar Burton said, "don't take my word for it."

Gee, this sounds pretty gosh-darn swell! How can I get involved?
-Just go to Kiva.org. You can get stuck in with as little as $25, I believe. Currently, Debbie and I aren't in any lending teams, but that options available if you want to lend as a group according to religion, location, whatever. There are tons of these teams. Joining a team, to the best of my knowledge, doesn't obligate you or your money to any borrowers, locations, or market segments.

Wait, this is all tax-deductable, right?
-Um, I'm no tax specialist, but no. Remember, you can always pull your money out when a loan is repayed if it's a big deal. Further, you don't stand to make any capital gains, as the most that will be returned is the principle (and we're talking a couple hundred bucks, tops). Donating to Kiva is however, and has options for producing receipts for tax purposes.

In summation...

I hope that this been enlightening, and moreso I hope that you're on-board with us in our choice of wedding favors. If you have any questions, feel free to contact Debbie or I, and we'll answer to the best of our ability.

In the next post, we will confirm how much we put in and will keep you all in the loop as we start searching for a borrower! Stay tuned.

Refs (no guff on the style, please; all articles pulled off of UC's online database):

1. "The Microfinance Revolution: An Overview" R. Sengupta, et al. Federal Reserve Bank of St. Louis Journal
2. "A Breakthrough in Women's Bargaining Power: The Impact of Microcredit" Kahn Osmani, L. Journal of International Development