Microloans are extremely effective. At one point, they were even believed to be the “silver bullet” for helping others. However, even a great idea can be improved upon. Here are five reasons why a new kind of microloan is needed.
One of the best things about microloans is that a person who receives a loan becomes self-sustaining rather quickly. But, this does not mean that they have moved out of poverty. If one poor tomato farmer sells their product to one poor butcher, the money is just exchanging hands and/or the profit margins are very slim for each. Their lives are significantly better, but not exponentially better. It’s exponential growth that needs to happen in the developing world.
In Western world culture, we wouldn’t dream of launching a product-based business without an online presence. It’s likely that we would even attempt to sell online, perhaps even exclusively. It is not logical to think that a business in the developing world will grow quickly that is not doing the same. By connecting a developing world business to online ecommerce, their business could become big, fast; and that means more jobs.
A product line is stronger when it is exposed to a larger market sector. Typically, the larger your market sector, the better your product needs to be, because there are more demands on your company from consumers. This puts the necessary pressure on a company to become stronger, faster, and thus more sustainable.
If job creation is what microloans are really all about, then being in the business of creating very small (often family) companies is not sufficient. These micro enterprises are not in the position to hire more people; their business model doesn’t allow for it. A business model connected to the Internet would.
A large customer base is necessary for a company to grow rapidly. When many products are brought into one market place, in an elegant way, the amount of buying power of the customer base generally increases. This is part of why Amazon.com is such a successful company. If a set of quality products from the developing world were brought into one place, the customer base would also likely increase, creating a better chance of collective success.
Jesus’ Economy envisions creating a large microloan program with ecommerce in mind. We’re going to supplement this with training of entrepreneurs, including biblical ethics training to ensure that corruption does not destroy the investments we make. We plan to bring together entrepreneurs’ products into one large marketplace—to create a network effect that is good for the fair-trade minded customer and for the businesses. All proceeds will be automatically reinvested in the work of Jesus’ Economy. We believe that this will create economic change in communities; it will create jobs.