DIY Foreign Aid on a Budget

The great thing about DIY is that it is cheap and effective.

That applies to DIY foreign aid just as much as it does to building that book shelf the wife has been moaning about for the last year.

You can get somebody else to do it, but then you know it is going to cost alot more and probably be done to a lower standard as well.

If you really want to get ripped off just get a government department to do the job. Not only will you pay through the nose, you will also get crap service. That is why much of the seven billion we spend in aid every year simply goes down the toilet.

Not only does our governmental aid fail to reach the deserving poor, it is often used to ensure they remain downtrodden.

Have a read of this Daily Mail article (HERE). AHa! I hear you say, but that is the Daily Mail, they would say that wouldn't they?

Well, how about this Zambian Economist (HERE) Incidentally she created quite a stir with her book titled Dead Aid (Amazon HERE)

So what can you do?

Personally, I have followed the advice given by the above Zambian economist (DAMBISA MOYO) and have loaned out (not given) a small amount of cash to honest hardworking folk all over the world through an organisation called Kiva (HERE)

It may be only a lousy $150 in total but I suspect it does more good than a considerably bigger sum doled out by the foreign office.

Not only that it is also relatively safe.

On Kiva you can deal yourself in with $25 (circa £18). That and you can also get your money back if necessary. This is Billothewisps Kiva page (HERE)

At least have a look at Kiva. You can make a difference as an individual by giving a hand up not a hand out. Even though you end up doing the bloody Foreign Office's job for them.

Despots versus the Deserving

OK my grubby little Englanders, here are a couple of very happy individuals, possibly celebrating some of the few billions you have shovelled their way.

Now, while the one on the left has recently spent a great deal of time sat on the toilet thinking up excuses for the rape, torture and murder he has inflicted on his own people, there are several other equally vile despots queuing up to take his place on the world stage.

All of these despots are gleefully massaging the ego of  the UK governmental "Ship Of Fools" who promote the  prevailing "vision" of the UK being a [sic] (or is that sick) foreign aid "Super-power".

The other smiling bastard in the picture needs no introduction.

While Mugabe is regarded as a bit of a bad boy by the foreign office, that has not stopped them in the past giving him everything from gold plated Mercedes limos to jet fighters.

Oh, So much better value than spending it on hip replacements for old ladies.

Needless to say all the money, aid, skill and sheer hard work that has been squandered on these so called "World Leaders" has effectively gone down the drain.

Now have a look at this bunch.

Billothewisp along with about 30 other folk, each lent them the princely sum of $25.00.

It is being repaid, on time and to the penny.

Or this group.

I blogged about these guys earlier Here (if you adore guinea pigs - look away now!)

Again, like the African group, they are normal, average, honest people who need a hand up, not a hand out. They also have met all their re-payments in full.

The loan was set up by an organisation called Kiva (Here).

I do have some issues with Kiva. But compared to traditional foreign aid and "charity" they are shiny white virgin saints.

Our government can continue to stroke its political ego. It can continue fuelling the despots of this world by giving them massive hand outs.

Or it can promote personal responsibility. Enable honest people, who are willing to lend relatively small amounts, to directly help other honest people wanting to borrow.

A hand up not a hand out.

If Cameron wants to install some "moral" imperative, maybe he should facilitate individuals doing their own "foreign aid". Cut the appallingly wasteful foreign aid budget and give tax breaks to the average person. Encourage them to lend on a person to person or Peer to Peer basis.

Cut the Mugabes and Gadaffis out of  the loop.

Am I dreaming?

Naive?

Is this wishful thinking?

Possibly.

But it cannot be worse than the current foreign aid debacle which swindles the UK tax-payer, fuels depravity and gains little or nothing for those who simply need a hand up.

Guinea Pig Stew

The other week it came time to loan out $25 on Kiva that had recently been repaid. I had a quick search through the listings for a suitable borrower. 

My grand-daughter decided to help.

We looked through a few. Then we came across a fine band of Peruvian farmers. They wanted the money to buy chickens and Guinea Pigs.

Stew? My names is not Stew. My name is Brian

My grand-daughter thought about this particular group long and hard. Her wistful expression said it all.

Guinea pigs. Fluffy little Guinea pigs. Nice guinea pigs. Then, by association, nice Peruvians, kind Peruvians, looking after the nice little Guinea Pigs.

I was a coward. I said nothing.

Because of my silence there was no option. The Peruvians got their loan.

Here they are:

The Yayanmarca farmers Group Peru

One day I'll have to summon thhe courage and tell my grand-daughter what the Peruvians farmers plan for their fluffy little Guinea pigs

But not for another ten years, or maybe twenty.

Don't forget, Kiva is great.

Make loans directly to decent people in the third world, not their greedy ruling class. These are loans that get repaid, not lost in a Swiss bank account or a Mercedes Benz dealership.

Everyone gets their own link from Kiva. Here's mine, go on have a look. (you know you want to)

http://kiva.org/invitedby/bill8214

Do I get any money from this link? - don't be bloody daft.  But if you would rather their main site....

http://www.kiva.org/

But I do get a bit of Kiva "street cred" from how many people eventually become loaners from my introduction.

I might need that if the local animal rights looneys come calling. Especially if they start asking pointed questions about what exactly happens to Peruvian Guinea pigs -  and who is financing them.

Banking, Foreign Aid and Pensions.

OK you grubby little Englanders. It is Saturday night. Let us put the world to rights. Or at least, let us think about how to fix a few things that desperately need attention. So tonight....

Putting the world to rights involves doing three things:

1. Screwing over the disgustingly greedy bankers.
2. Ensuring foreign aid actually goes to decent people not tyrants and despots
3. Making sure that those who invest in a pension actually get one.

Here is a short discourse on the way it is, what needs fixing, and the way it could be.

The way it is:

Banking
The obscenity of the banking scandal continues. The banking wide boys reward themselves with outrageous bonuses while waving two fingers to the rest of us. The banks charge loan shark rates to borrowers while rewarding savers with a pittance. Businesses needing working capital can go to hell.

Foreign Aid
The governement grotesquely announces that it wants to be an aid "super-power". It shovels more and more money abroad in a grandiose attempt buy itself friends and importance on the world stage.  Massive amounts of the aid money ends up supporting the tyrants and bigots who brutalise much of the third world. The decent people of the third world who need a hand up (not a hand out) get the table scrapings, if they are lucky.

Pensions
The self same banks, also peddle dodgy pensions. Though they make their financial advisors and associates millions, they leave the suckers drawn into their schemes on a sure course to a poverty ridden old age.

So how can this be fixed?

Basically, as stated at the start, we need to:

1. Screw over the bankers.
2. Ensure that foreign aid goes to decent people not tyrants.
3. Ensure that people who invest in a pension actually get a decent return.

So here is a suggestion. Naive it may be. Even unworkable - maybe.

But I hope you find it interesting,

The way it could be.

Instead of trusting the untrustwothy bankers, pension savers would commit (say) a portion of their pension to micro-finance initiatives. This could include foreign aid initiatives like those run by Kiva. Through organisations like  Kiva, this money gets lent out directly to the ordinary decent people in the third world. Of course lending like this, although relatively safe, gives a poor or nil financial return.

This is where the foreign aid budget comes in. Instead of just funding ugly despots, the foreign aid budget could provide a return to the pension saver for the loan. This would amount to perhaps 5% of the loaned amount. It would ensure that foreign aid actually supported decent people rather than the ugly despots. It would mean individuals would take responsibility for helping the poor of the world, not some government quango. Meanwhile their government would take responsibility for ensuring that pension funds, honestly saved, get a decent return, At the same time, they could massively reduce the corrupt foreign aid budget.

But there are losers:

1. The ugly despots who find they cannot now affords a new golden 500 series Mercedes every six months. Or some new electric whips for their secret police.

2. The bankers who suddenly find out that their slush funds have vanished and their bonuses are in jeopardy.

Anyone grieving for the losers?

...Thought not.

p.s. If you are wondering "What about investing in UK industry?" ... see one of my next posts

Sixteen Honest Women

I thought it was time for a quick update on how things are going with my micro finance experiments with KIVA. Kiva is an organisation that negotiates small loans to individuals in the third world. (More on KIVA Here)

This post concerns a loan I made ($25.00) to a Paraguayan business being run by sixteen women. It has just come to term.

The Paraguayan New Horizons group. Loan repaid in full

About 120 of us built the loan so the total loan amount was $2750.00.  The loan was for this group to purchase stock so they could be self supporting, running their own catering business.  While the interest on the loan is consumed by the micro-finance bank as their fee for the arrangement, I still got back the money I lent out. On time and to the penny.

If I want, I can now withdraw the money, or I can re-lend it out. Probably the latter - for now

Needless to say, standard greedy banking practice would not have entertained such a paltry loan. Especially to a group of women in a third world country. They would much rather lend a few million quid to some corrupt elite so they can buy a few nice new Limo's or rocket launchers, and then default.

So, in the Third World, honest but poor people repay their loans. Unlike many of their ruling elites.

Sound familiar?

Meanwhile here, every major charity consumes all of you money. Your money disappears into a black hole.

Has it done any good? - the guilt ridden propaganda says so.

Or has it just lined the pockets of the Great and the Good?

You tell me.

At least with Kiva you have the opportunity of getting your money back - and seeing who it is lent out to. OK you take a small risk that the loan may go bad. But Hey! That's life.

Say you committed to "give" £15.00 a month to some standard charity to do some anonymous "good" work. Over 20 years that is £3600. Gone

If you lend it out through Kiva after 20 years that money will still be there. Owned by you. It can still be re-lent out or if you or your family need it, then it can be withdrawn. In the mean time it has been helping poor but honest folk in need of a break.

Remember charity should always begin at home. You and your kids come first. So being able to get the money back if needed is a real boon. But this is a really good way of doing a lot of good for common ordinary folk without much risk to your own personal assets.

It is also really satisfying to see you money being used for tangible social gain by real people. That is the beauty of Kiva.

The alternative is the guilty "donation". The medieval style indulgence to compensate for the crime of being born in a developed country.

Maybe your  donation will do some good. Or maybe it will disappear into the coffers of a Mercedes dealership or some Swiss bank account.

At least with Kiva you get a chance of seeing where your money goes.

From now on, when it comes to charity, I'm giving loans, not casting money to the wind like some Victorian Oligarque.

No more guilt trips. No more palm greasing. And certainly no more 500 Series Mercedes for the Great and Good.

From now on, It is Kiva for me.

Kiva: A Hand Up Not A Hand Out

OK you grubby little Englanders.  Today I want to explain how as individuals, we can give a hand up to the decent hard-working poor in the Third World. Not a hand out to the idle gangsters who rule them.

I expect you may have noticed that Billothewisp has a very low opinion of the way UK foreign aid is allocated and spent.

To me it looks more like a never-ending pleasure excursion to fame and riches than a method of alleviating suffering. The fame and riches are, of course, shared out among the Fats Cats at home and the Fat Cats ruling the Third World poor.

Meanwhile the poor sods at the bottom of the pile  get the table scrapings.

Overhanging the whole enormous DFID budget is the ugly stench of graft and greed. Fat cat salaries and cynical exploitation of both the giver and receiver. Read this article in The Telegraph for a quick whiff.

Via our government and it's incredible addiction to Globalisation, we are soon going to be  each "giving" another £500 a year each whether we want to or not.

How charitable.

But people in the third world deserve a hand up not a hand out. Charity should be only for the truly incapacitated, not for the decent people of the Third world. They deserve better.

So Billothewisp doesn't do charity any more. Charity is for the work-house and pompous Victorian oligarchs.

Now there is a better way for a personal involvement in helping the poor of the third world.

It is called Micro-finance.

Small loans to real people in need of a hand up. The crucial thing here is that the money is a loan not a hand out. It gets repaid, and then (of course) can be lent out again.

It appears to work. The main organisation involved in this at the moment is Kiva. I have a couple of issues with Kiva, but nothing that (as yet) would stop me using them.

It is run a bit like the UK peer to peer lending organisations, Zopa and Funding Circle, but Kiva is a not for profit organisation. Kiva allows individuals to loan small amounts of cash to real people. $25 via Paypal deals you in.

The people are  requesting loans to run a business or generally improve their life. Just like in the UK.

The default rate is evidently 1.8%. Which is pretty good. Of course if they default then they don't get another loan. But almost to a man (or woman) they don't default. Which must give us all a bit more faith in humanity.

For Billothewisp there is to be no more "charity" to poor Africans, but there will be loans. I am going to give a hand up not a hand out.

It is a pity that my pay is going to be drained of another £500 so the fats cats in the DFID can go and squander it at home or in foreign parts.

Believe me, with Kiva I think even my 2 year grand-daughter could do a better job with my £500 than the DFID.

A Business Banking Rebellion

Once upon a time us grubby little Englanders regarded our banks as respectable, honest institutions. Pillars of society. Bank managers were respected and viewed with awe. Meeting one was usually regarded with a level of trepidation. A bit like  being called to see the headmaster or waiting to see the dentist.

Your money was safe in banks. They paid interest on your savings and charged appropriate rates for loans. They made a respectable profit on the difference.  They were seen as the basis for fair dealing and financial honesty thoughout the country.

Small businesses could go to them assured that their situation would be given fair consideration, even if "the interview" was a bit like an interrogation by Special Branch. But if you had a good  history you could get the money to expand your business. You could trust the banks.

How things change.

At the moment the small businesses requiring short term loans are being crucified. Even if they are offered loans they are often at extortionate rates of interest.

This reluctance to lend becomes a self fulfilling propecy. No loans mean businesses cannot expand or modernise. No expansion or modernisation means they lose market share. They become less viable.  As they are less viable they are even less likely to attract a loan. Eventually they go under or are taken over. Hey Presto. The bankers were right all along.

But there is hope.

Lenders and borrowers are rebelling against the tyranny of the banks.

The new revolutionary concept of Peer to Peer banking is storming ahead. This is where the "banker" acts like a facilitator or intermediary and does not actually hold the purse strings itself. Real, actual people are the lenders and they decide the rates.

Most of the development so far has been with enabling peer to peer lending to individuals. The main player in this market has been the highly successful firm ZOPA. Now the model has been extended into the business sector by a new company called Funding Circle.

Funding Circle is soley concerned with facilitating loans to small and medium sized businesses. They are in their infancy at then moment but the concept looks good. It works by letting individuals directly loan money directly to small businesses. Funding Circle is simply the intermediary

Small businesses needing cash can register to borrow money.

A single lender will make many very small loans (£20) to many businesses. A single credit checked borrower will have their loan constructed from many small lenders.

The interest rate is decided in exactly the same way as done at ZOPA. The lender decides what rate he wants to achieve and then the loan offer is contructed from the lowest offers. So if you offer to loan money at a ridiculously high rate you will have no takers, while the borrower is classified according to a credit rating so he will only be offered a loan from borrowers who will have adjusted their rate to take into account the credit risk. On any one borrower, a lender is only risking a small amount of money.

The end result is that businesses can achieve loans at significantly lower rates than offered by the banks while lenders (i.e. savers) get a return (that takes into account potential bad debt) which is at least twice that offered by the banks. You can, by the way lend as little as £500. This is not a scheme simply for the rich.

Before you ask, I have no financial or work interest with Funding Circle. That is other than that I have bunged in £500.00 to see what happens. So far I am very impressed.

If your small company needs a fair loan, have a look at Funding Circle. If you have some savings and you want to get a good return (and actually use your money to do something useful) then I recommend you look to become a lender. As well as that, in a small way you also get to screw the greedy banks.

Next (or soon)  I will be looking at the third very interesting leg of Peer to Peer banking with KIVA and the charity sector.

The Bankers Achilles Heel

Billothewisp has been watching the unfolding farce surrounding bankers bonuses with probably as
much disbelief and disgust as the rest of you grubby little Englanders.

I suppose it really was too much to expect the arrogant ignorant and greedy to put anyone else before themselves. Even when we are all up to our bottom lips in their debt.

The bankers feel invincible. They can ignore the shrill cries about fair play and  responsibility. They can sneer at the common hard working folk while gloating over their own growing mountain of gold.

This travesty will continue year in, year out. Until, out of nowhere, "something" will happen that turns them from an arrogant elite into a flock of foolish redundant dinosaurs.

And maybe that "something" had already happened.

Maybe an event has already taken place that spells doom for out extremely well fed friends. Perhaps they have been so busy swindling the rest of us that they did not notice the high tide of banking excess has reached a turning point.

Revolutions, even against the most despicable tyrants, never happen unless there is someone, or something of a revolutionary nature that sparks the gunpowder.

Billothewisp reckons (or at least hopes)the today that spark has arrived and has the name of Peer to Peer banking.

Currently the most popular manifestation is a company called ZOPA but there other infant companies like Funding Circle. The concept has even expanded into the charity field with an organisation called KIVA.

Currently all of these companies simply deal with arranging and financing loans. But all revolutions have to start somewhere.

Peer to Peer banking works in a completely different way to normal banking.

With a bank you borrow off the bank. They decide the rate. You get what you are given. The money they take in from savers gathers derisory interest. The bankers pocket almost all the profit.

Companies like ZOPA work in a completely different way. They are an arranger. They do not own the loans, but they take a commission for sorting things out.

A loan for £500 will have 50 lenders, each lending £10. Each lender, lending in total £500 will lend £10 to 50 different borrowers. All borrowers are credit checked as for a normal loan, and the risk of bad debt is reduced by the spread of the lenders money over many borrowers.

The best part is that the interest rate is determined by what the lenders is prepared to lend it for - and what the borrower is prepared to pay. Hence the name ZOPA (Zone Of Possible Agreement). Borrowers pay less and lenders gain more. This would have been impossible before modern computers.

It is revolutionary. The cobwebbed ossified banks have no answer.

I hope it works.

I hope ZOPA, its clones and competitors continue to grow exponentially. I really hope the greedy banking elite come to rue the day the scorned and swindled the British public. Maybe with a real revolutionary alternative to the big banks we will avoid ever getting in this mess again.

I'm having a go with ZOPA (you want to try lending through them, you can start with £50.00), also Funding Circle and soon KIVA. It's worth a punt.

I'll tell you how it goes.