Better systems can aid business of giving money to tackle poverty

On a visit to Ethiopia last week, the Taoiseach chose to visit one of the most impoverished areas of the world and witness, first hand, profound poverty.

While there, he was introduced to a woman who had bought four potentially life-saving sheep with a micro-loan provided by Irish Aid.

Irish Aid is operated by the Department of Foreign Affairs. It is, effectively, managed on behalf of us citizens.

Moreover, its micro-loan activity seems a simple exchange of money with presumably helpful repayment terms — regarding duration and interest — targeting those among the poorest in the world.

Given those parameters, should it not be possible to create an online platform for this purpose that replicates the peer-to-peer lending activities that have mushroomed across the world lately?

Imagine an online service that allows you commit money, no matter how small or large, on a one-off or regular basis, to a platform overseen by the Irish Government and under the stewardship of Irish Aid.

That body, I’m assuming, can be trusted to identify and support those most in need for loans of this type.

Imagine, too, you provide your money at zero interest with long dated duration and the possibility of no repayment.

Irish Aid clearly believes that well-managed lending is a preferable way to encourage and support self-help economics in the toughest parts of Ethiopia.

That, presumably, is based on the view that hand-outs, the classic form of charity towards developing economies, is ineffective in the long-term.

There is plenty of evidence that so-called third-world charity became a cesspit of corruption as free money ended up in the wrong hands. 

A micro-loan programme, that is overseen professionally, seems a better alternative to that.

If Irish Aid can host a simple peer-to-peer micro-loan platform that connects citizens in a country like Ireland, providing zero interest loans, with borrowers that are chosen and served by this charity I suspect the reaction from the public would be very strong.

If such a service was available, and included real stories of micro-loans in action supporting small farmers and tiny businesses to begin the process of self sufficiency and economic independence, it would help broaden the value and importance of such a system to more potential lenders.

The Irish Aid website says, in reference to poor primary producers: “Often too, these farmers have no access to affordable credit.”

Surely there is a tap of affordable credit accessible from citizens of Ireland, via a low cost technology platform, that can safely address this?

Of course, any initiative of this type requires systems and processes that ensure integrity, the avoidance of money laundering attempts and political opportunism.

These challenges, though, have been worked through by a myriad of peer-to-peer online platforms that have developed in recent years.

Using advanced technology, they allow lenders and borrowers to connect.

A micro-loan system for very poor borrowers would need Irish Aid to manage the demand side of the equation but the lenders could be served by an off-the-shelf online solution.

Technology has allowed many corporations to base themselves in Ireland and reach far flung markets in Asia and Africa to sell goods and services using advanced online tools to communicate and manage trade.

How far-fetched is it to envisage the same innovation as a means to providing real, low cost and efficient money transmission platforms that give oxygen to the micro-lending form of aid?

Micro finance has long been touted as a way of enabling poorer regions of the globe to combat extreme poverty.

If Irish Aid could be given the technology backing to source funding from well-meaning Irish citizens it could multiply the type of exchanges witnessed in Ethiopia last week.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.

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