• we have a ‘crisis’
• the State needs to cut spending
• home repossessions and bankruptcies are rising
• we discover that bankruptcies and repossession are illegal and unlawful and more victims of financial, legal and judiciary exploitation
• and a Bangladeshi has to show us how ‘proper banking’ has to be done – for the real people in the real economy.

This article in The Independent describes the opening of a branch in Glasgow.

AppLab Application 1: Weather Forecasts

Users can now send simple text messages to obtain daily as well as seasonal weather forecasts for certain cities and districts. Data about the day’s temperature, forecast for the next three days, as well as other atmospheric conditions is sent back instantaneously.

The benefit: for one, farmers can plan their farming activities in accordance with the mood of the weather. Secondly, people can plan their trips to the nearest town or city, a journey that is often on foot. The advantages offered by this service are simple and more a matter of convenience.

AppLab Application 2: Google Trader

Users can use this application as a marketplace, or an intermediary though which buys and sellers of agricultural products meet in order to decide upon prices, quantities and timings of transactions.

The benefit: buyers can easily search for the best bargain while sellers can negotiate the highest possible prices for their products. At the same time, since buyers and sellers, who could live several hours away from one another, retain the money that was previously given to the intermediary, or middle-man as his margin.

AppLab Application 3: Farmer’s Friend

As the name suggests, this application provides farmers with short tips about preventing disease in crops and animals, maximizing crop yield, storing crops efficiently and safely, etc. Google’s search engine technology is used to scour a database of short pieces of information.

The benefit: traditional and modern wisdom is gathered and disseminated through this service to ensure everyone has timely and relevant information which can improve their output as farmers. Educating the world, one farmer at a time.

AppLab Application 4: Clinic Finder and Health Tips

Text messages are used to spread information about basic ailments, AIDS, HIV, locations to the nearest clinic, etc., to patients as well as people who may be interested in gaining such knowledge. (Read about another health-care initiative by Grameen)

The benefit: poor health is a major concern and source of cash outflow for the poor. This service will ensure people get quick first aid, and can take the right preventative measures to ensure better health standards. The user’s privacy is a bonus.

These services are simply the tip of the iceberg that is yet to be explored by Grameen Foundation and service partners of AppLab. Can you think of any other service that may be helpful?

(Guest post by Fehmeen, Microfinance Hub)

The full article is here.

If only the author understood the maths of interest and compounding interest! And if he had a less arrogant attitude towards “countries such as Peru, Pakistan or Nigeria”. As if people were different in their desires to be treated honestly by an honest system.

Maybe one day also this FT columnist will wake up to the dishonesty inherent in Western financial institutions! See Financial Fairness as our latest attempt to make a difference in Westminster.

The German Ministry for Economic Cooperation and Development has now asked the Development Bank KfW to provide a fund of $m 130 to alleviate shortfalls for microcredit institutions.

The Minister for Development said: “We have to make sure that those who contributed least to the crisis, don’t suffer from it the most.”

“We are doing subprime lending, but we are doing it right,” this is one of the quotes from this article that appeared in the Guardian on January 26, obviously also referring to Dr. Yunus and Grameen.

In the large picture of a world with a chaotic monetary and financial system, this is clearly a ‘sweet’ and effective attempt to do good from a desk and computer in Massachusetts.

A great global resource for anybody who can afford to study the situation.

Mr Seiler is inspired by Muhammed Yunus, founder of Grameen Bank, the Bangladeshi lender. Now microfinance is turning full circle: in 2008, Grameen established posts in New York and Berlin, for those who fail conditions imposed by high street banks in those countries. Amadeo Giannini would understand.

Building wealth with tens of thousands of small accounts

By Brendan Maton

Published: January 4 2009 18:27 | Last updated: January 4 2009 18:27

Leo Seiler is fond of telling the story of Amadeo Giannini, a microcreditor who over 100 years ago saved many farmers and small merchants when their region was racked by a severe earthquake and fires.

While other banks in the region struggled to provide extra finance in the aftermath of the quake – not least because the fires kept their vaults and the money therein too hot – Mr Giannini ran his simpler operation from his own rural home, making loans to those who travelled on foot or by horsecart to ask for credit in person.

The region in question was San Francisco and the date was 1906. The loans helped rebuild the city. Mr Giannini’s bank later bought the bonds that financed the building of the Golden Gate Bridge and his acumen in the world’s fastest-growing economy eventually saw him become chairman (and indirectly controlling shareholder) of Bank of America.

Mr Seiler himself is something of a self-made man. Like Mr Giannini, he was born into a comfortable family, but had to work during the summer holidays. His first job was as a gofer at Raffeisen Capital Management in Vienna. Although he was not a trainee portfolio manager, he asked the right questions. Twenty-three years later Seiler Asset Management looks after several billion euros on behalf of wealthy clients.

In discussing his life, Mr Seiler abhors the word “career”. “It comes from the word for ‘racecourse’. I don’t want to be like an animal running round in circles.”

He prefers to be smarter with his energy, travelling across various time zones promulgating various projects but most notably, the Dual Return Vision Microfinance Fund, a separate venture from SAM.

Mr Seiler says Dual Vision is Europe’s biggest “pure” microfinance fund. Pure means all debt; the fund’s €80m (£77m, $112m) capital goes straight to microfinance institutions and, thence, to needy entrepreneurs, farmers, shopkeepers and small businesses.

For investors familiar with 50-200 holdings in a portfolio, it comes as a revelation to see almost 95,000 businesses served, and possibly 195,000 individuals. These data appear prominently on the fund factsheet.

Mr Seiler is adamant that this form of financing is more useful than socially responsible investing. “I hate the word ‘ethical’. SRI just seems to pick ‘best-in-class’: so you get the best-in-class oil company; the best-in-class chemical company. I don’t know if what we are doing is ‘ethical’. I do know that it is a practical solution to one problem.”

One might argue that microfinance is a practical solution to hundreds of thousands of problems, given that it is trickle-down investing. Microfinancing could grow from $5.5bn at present to as much as $250bn, according to responsible-investor.com.

Mr Seiler cautions, nevertheless, that most of the world’s poor cannot be reached this way. “I would say there are only 500m-700m people who live in societies that are sufficiently stable for microfinance to flourish,” he says.

That leaves billions more reliant on charities, non-governmental organisations and fortune. Dual Vision does not, for example, invest any money in Africa. Mr Seiler cites the high level of corruption and rarity of African microfinance institutions (MFIs) accepting dollar or euro-based loans as two major dissuasions.

Elsewhere in the world, Dual Vision makes loans in euros or dollars. The local MFIs then bear currency risk. The lack of activity in Africa is a stark reminder that earning returns is this fund’s second, integral vision. Mr Seiler draws out a garish pink plastic wallet from his pocket. It is made by a women’s collective in the Philippines. “Our first venture,” he beams proudly. “I distribute these wherever I go. They are made from old drinks containers.”

When Vision Microfinance first visited the collective, the women did not trust them.

“They were used to paying rates of 20 per cent. Per day not per year,” he says. “That means if there is five dollars in the till at the start of the day and not six dollars by the end of the day, the loan sharks can beat you up or damage the property.”

By contrast, the MFI takes approximately 20 per cent a year; Dual Vision takes roughly 8 per cent. Of that gross income, 2.2 per cent goes in fees, leaving currently over 5 per cent for end clients. The MFI rate of interest here is not a global standard, however. Of the 2.2 per cent management fee, 1.5 per cent goes to agencies assessing and monitoring the MFIs such as Symbiotics of Geneva and the likes of Standard & Poor’s.

Mr Seiler says it has been a conscious decision not to spend on post-spend monitoring. In other words, if there are defaults, the fund will take a hit. The counter-argument is that the loans are so small and diverse, a fatal loss could only be suffered if an entire country combusts.

Mr Seiler is inspired by Muhammed Yunus, founder of Grameen Bank, the Bangladeshi lender. Now microfinance is turning full circle: in 2008, Grameen established posts in New York and Berlin, for those who fail conditions imposed by high street banks in those countries. Amadeo Giannini would understand.

Copyright The Financial Times Limited 2009

Ah Ha!!! This guy is on to something. I now have another link to add to the “Get Involved Links” Curtis Stephen from the New York City paper City Limits introduces us to Darryl Penrice.

Darryl Penrice likes to talk. His preferred topics of conversation can roam anywhere from the music of the late rapper Tupac Shakur and the murky underside of politics in America to the mechanics of microeconomics. But if there’s one subject that the 32-year-old Brooklyn resident and self-professed “ghetto prodigy” loves to discuss more than anything else, it’s a vision of a new way to fight poverty that he’s obsessed with making real.

For the past year, Penrice has been anything but silent about his proposal, meeting with an assortment of potential investors, city officials, nonprofit groups, college students and major grant-making institutions. In the midst of an outreach campaign, Penrice has been trying to earn support – especially the financial kind – to transform the website that he’s created from a prototype into a full-scale, anti-poverty platform that he contends will have a significant impact in the lives of people experiencing economic hardship in New York and well beyond. “I know what I have,” Penrice declares. “I’m not the most religious person in the world, but if God gave me a gift then I’m going to share it. This is something that can feed millions of people.”

Penrice plans for his initiative – an interactive website called Poverty’s Demise.org (or as he calls it, “PDO”) – to combine the open source atmosphere of Craigslist with the opportunity-expanding aims of Kiva.org, which allows for “microfinance” lending to entrepreneurs in developing countries. But in many respects, if Penrice’s ambitious plan ever goes live, it will launch an unprecedented Web-based undertaking.

Penrice envisions PDO as an outlet for person-to-person financial transactions in which donors help economically disadvantaged individuals – who have been screened and approved for participation – and struggling working-class families pay for essential daily living expenses, including everything from food and rent to utility bills and child care costs. Under the proposal, which Penrice details extensively on his website, the tax-deductible donations would be sent to recipients in the form of “universally redeemable” bar-coded certificates to be exchanged at participating retailers and service providers for specific goods and services. Incentives are also provided to both donors and recipients for volunteerism, and the purchase of healthy food and environmentally-friendly products.

The PDO model would also help to ease the burden faced by those on public assistance and seniors, both of whom are subjected to often-frustrating bureaucracies, Penrice charges. “The government is spending billions right now, but nothing is being done to fix a system that isn’t very efficient,” he says. “A lot of people are against welfare, but how can we tolerate a society where people who worked for 40 or 50 years are forced to choose between their medication or groceries?”

As he seeks to create a high-tech community-oriented platform that circumvents government and nonprofit social services, Penrice is clearly aiming big. He’s hoping to land an investment of $4 million to make an initial run. In addition to setting up an office, hiring programmers and sparking the first wave of donations, Penrice plans to focus on New Yorkers in need before branching out nationwide. One endeavor that Penrice hopes to launch through PDO is a program he calls Broader Horizons, where disadvantaged families are sent abroad. “Can you imagine taking a kid from Bed-Stuy and dropping him off in Japan for a week? The problem with generational poverty is that Dad is in jail, Mom is smoked out, and you think the whole world is a ghetto.”