No, I'm not talking about Kiva or Prosper. According to Symbiotics, a Geneva-based professional services firm for microfinance investors and fund managers, eBay has purchased MicroPlace, a microfinance marketplace that will let individuals invest in microfinance institutions. The article raises some important questions about a deal like this:
The announcement was made as part of an eBay executive's response to the question, "What is eBay doing to help promote saving the planet," which makes it all the more interesting. In addition to the questions raised in the quote above, the purchase also seems to me to be a data point for the following trends:"MicroPlace will soon launch an eBay style online marketplace where individuals will be able to make microfinance investments, most likely in the form of notes offered by microbanks. The transaction will be hosted by eBay working through an intermediary like the US Calvert Foundation in order for such investments to clear regulatory hurdles.
How “great a thing for the global community” it remains to be seen. ... in a ‘global community’ who are the customers? If the customers are those people in advanced economies...then MicroPlace is likely to be ... successful.... However, for the microbanks and the micro-borrowers involved there is the additional risk of foreign currency exchange. If this risk is not properly managed then the burden will fall heavily upon those who we all seek to help. Can a giant like eBay responsibly off load this clear and present risk onto microbanks and micro-borrowers?"
- the continued melding of big (eBay) and small players (MicroPlace) in an industry;
- how payment systems (PayPal) that didn't exist a decade ago are moving into all communities;
- a blending of commercial and NGO financial actors;
- the digitization of commerce
- the aggregation of lots of small into something big (small loans from individuals add up to big companies)
- the need to expand our universe of institutions when we try to quantify things like remittances and diaspora philanthropy
1 comment:
This makes an important point. Microcredit has developed a solid record of high loan repayment rates. But as we move further from the Grameen model of microbankers actually living in the communities they lend to, will the increasing distance between lender and borrower result in more risks, more defaults, and possibly even a financial crisis within this 'business'?
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