Since I joined Lendwithcare in January 2011 making regular monthly loans to small entrepreneurs has become somewhat of a monthly ritual for me. Each month I look at how much credit is sitting in my Lendwithcare account and decide on a set of fresh entrepreneurs to lend to. It’s not exactly ‘big business’ but I’m very much inclined to the view that it’s a good way to help people out of poverty and improve their lives.
Lendwithcare was set up by Care International UK, one of the major aid charities to provide microfinance to small entrepreneurs in developing countries. These are typically people whose financing needs are too small to interest the main banks. The basic idea is to provide small loans to people so that they can develop business ideas and work themselves out of poverty. Often entrepreneurs work from home and are very often women. They can be involved in many different types of enterprise ranging from small-scale farming to food or clothing shops (which may, in fact be market stalls) to beauty parlours or small-scale vehicle repair shops.
Lendwithcare partners with carefully selected local microfinance institutions (MFIs) who act as the channel for loans made by people like me. Entrepreneurs approach these MFIs with their ideas and plans and, if the plans are sound will be offered loans. These can range from a few hundred to several thousand pounds but are never ‘huge’. The MFIs then turn to Lendwithcare to add the entrepreneurs to their website so that people like me can finance their loans.
Lending is spread over many people – a bit like ‘crowd-funding’ so the amount of money any one lender puts up can be quite small – most of mine are £15 or £30 per loan. All of the money people lend goes to the entrepreneurs they support. Lendwithcare’s own operating costs are covered by voluntary donations from lenders.
Over the years Lendwithcare’s operations have expanded to include more countries and they now support entrepreneurs in 16 countries around the world. These are:
Zambia, Malawi, Uganda, Rwanda, Togo
Pakistan, Cambodia, Vietnam, Thailand, Philippines
Ecuador, Nicaragua, Peru
Palestinian Territories (West Bank and Gaza)
Georgia
Looking back over my loan ‘portfolio’ at some point I’ve helped finance loans in almost all of these countries (Uganda is the only exception).
Since I joined Lendwithcare I’ve helped fund 272 loans at the time of writing. Of these 216 have been completely paid back, 65 are in the process of being repaid and 1 is still seeking funding. So far, only 7 borrowers have defaulted on their loans. All of these were in Vietnam and each loan was partially paid back. They represent less than 1% of the total of all my lending to date, so my ‘loss’ is really quite tiny.
The money I have put in has ‘gone round’, that is, been lent and re-lent 4½ times. This is one of the things I enjoy about Lendwithcare – you lend, the loan gets repaid, you lend the same money again, and again and again. This is, of course just like investing in bonds or shares or whatever but with the difference that you don’t make money out it – there’s no financial ‘return’, just the satisfaction of knowing that you’ve helped people improve their lives.
More recently, Lendwithcare has added a new initiative – Climate Positive Grants.
Poor families particularly in low-income developing countries around the world are already feeling the impacts of climate change. They are seeing first-hand how unpredictable rainfall patterns cause water shortages, reduce harvests and exacerbate hunger. They are witnessing the effects of more extreme weather such as cyclones and hurricanes that destroy their homes, lives and incomes and are having to cope with longer, more severe droughts which kill their livestock and threaten their crops.
Climate Positive Grants provide the opportunity to directly support projects which either prevent CO2 emissions from being released into the atmosphere, or pro-actively absorb CO2 from the atmosphere, while also creating opportunities for low-income communities. Unlike loans, however grants are not re-paid by recipients.
Lendwithcare works with FairClimateFund who verify how much CO2 is prevented from entering the atmosphere by each project. These ‘savings’ in CO2 emissions generate ‘carbon credits’ (1 carbon credit = 1 tonne of CO2 ‘saved’) which FairClimate Fund can sell and funds raised used to invest in further projects.
At the time of writing, Lendwithcare is seeking funding for 19 projects, mainly in India and some in Rwanda. All of these are for people or groups of people wanting to fund the purchase of improved stoves for cooking. In India the traditional cookstove or ‘chullah’ uses a relatively large amount of firewood and produces significant amounts of smoke. Improved cookstoves reduce the amount of fuel required by 50 – 55% and are very much less smoky. On average they are estimated to reduce CO2 emissions by about 2 tonnes per year. In Rwanda cooking is often done with charcoal and people are seeking to purchase advanced biomass stoves that use pellets made from forestry waste. These stoves can save up about 3 tonnes of CO2 per year and are virtually smoke-free.
I haven’t yet got involved in Climate Positive Grants but it’s an interesting development and is a way of doing something that directly reduces CO2 emissions.
If you would like to sign up or know more about Lendwithcare go to https://lendwithcare.org.