28 February 2012

Kiva - an invitation

I just realised that Kiva wasn't among my blog tags. It should be. It's a US-based organisation that allows you to contribute to small loans made by microcredit institutions across the world. It allows people who don't normally have access to credit to develop businesses or personal opportunities that can change their lives.

Some people are worried by microcredit because the institutions that arrange loans and collect the repayments make a profit from doing so. To me, so long as the lending terms are fair and not usurious, I have no problem with that at all. It's all part of the development of an entrepreneurial business culture, and I think it should be applauded.

The process is fairly simple. The lending screens enable you to see the headlines of (usually) the thousand or so loans that are currently fund-raising, and filter them or order them by country, duration, purpose, male/female, individual or group, and so on. Then click through to see full details and make a loan. You can fund your account through PayPal which in turn can be funded from a debit or credit card, or a bank account.  The minimum loan amount is USD 25.00, about GBP 15.77 at current rates, less than a few beers at my local pub.

When you make a loan, the process allows you to make a donation to Kiva's running costs. This is deductible in some way that I don't understand for US taxpayers, but there's no Gift Aid deduction for UK taxpayers and so I decline the opportunity. When I eventually stop doing this, I'll simply donate my whole balance instead.

My experience has been pretty good. Two loans out of 79 so far have ended with a loss, one of USD8.70 when the borrower defaulted, and the other a currency exchange loss of USD0.10. Two more are delinquent, very late with payments but both have paid back more than 80% of their loans.

 I don't know of any equivalent that's Gift Aid-efficient in the UK, but I'd recommend this as a relatively low cost way to make a real difference to people that are doing their best to improve their lives and the prospects for their families. Here's a personal invitation link.

23 February 2012

RBS - stop rocking the boat

I love the BBC Radio 4 Today programme, and listen to it every weekday.  But this morning's (23rd February) episode had me shouting at the radio.  Michael Fallon, MP, member of the Treasury Select Committee, and James Barty, of the Policy Exchange, were interviewed by Evan Davis following the Royal Bank of Scotland results announcement - a £700 million loss in 2011 compared with about half of that in 2010.  In the context, that's not actually too bad a set of results.

Evan Davis asked Michael Fallon questions with the drift that we need to change track - sell, hold, or do something else:
(a) the Government should dispose of its RBS shares now and 'cut its losses'
(b) "why do we need to get our money back, we know we've lost the money"
(c) if not then clearly investing in banks is good, and we should buy a couple more
(d) if share price is going to go up why don't we buy more shares
(e) or maybe we should break RBS up into smaller businesses or mutualise

James Barty thought it would be a good idea to give away the shares but with a clawback for the Government when selling.  This would remove the Government overhang of 83% of the shares, and reduce political interference in the bank's management, but it's never been tried in this country.  [Given the known track record of public sector information systems, it could even be a struggle to identify eligible reciipients in a reliable way].

Here's a link to BBC iPlayer - the segment starts at 07:52 (1hr 52mins 15sec into the recording). 

Harm is already being done to the financial sector in this country, with the media fanning the flames of an anti-business culture. The Government is damaging the valuations of banks by imposing stricter banking regulations far faster than competing countries.

The drift of the interview was disappointing, and the questions badly thought out.   It's really unhelpful to the aim of recouping the full public stake in RBS, for the BBC to probe for ways to destroy the value of assets that we're seeking to sell. Stephen Hester has charted a course - stop rocking the boat.