eBay initiates microlending for poor entrepreneurs
Online auction giant eBay has launched a microlending website that lets people invest in entrepreneurs in poor communities around the world and get a return on their money.
Unlike micro-finance organizations that make interest-free loans to people in developing countries, Microplace.com offers investors profits for funding folks trying to build better lives, said founder Tracey Turner.
"You are actually investing in the world's working poor," Turner told AFP. "And for the first time you get a return on investment. You can take the profit and invest in more people in a virtuous cycle."
Turner's vision of MicroPlace began taking shape in 2005, after she lived for a time with a Kenyan family comprised of a single mother caring for three children.
The Kenyan woman bought a sewing machine with 100 dollars she borrowed and started an in-home business making school uniforms for local children.
The woman paid the debt and managed to send one of her sons to college in the United States.
"When you are out in the field talking to these women whose lives are transformed because of 30 dollars or 10 dollars, then you are part of the movement forever," Turner said.
California-based eBay bought Turner's business plan in June of 2006 and the website launched October 24 of this year.
Website visitors can browse investors by country, seeing pictures of people seeking loans and reading about their business goals.
MicroPlace connects investors with micro-finance organizations in the various countries. MicroPlace scrutinizes the organizations to check their legitimacy.
"Our job is to vet," Turner said. "We do a lot of research."
Turner said rates of return are modest but that investors at the website see value in addressing global poverty. Lenders shoulder the risk that loans will not be repaid.