The World’s Most Impactful Investment
A Donation That Never Stops Giving
“The first microloan I ever gave was in Haiti to a man who was making $3/day”
“I asked him what he would do with a loan and he said he would buy a fishing net and sell lobster”
“I gave him a $200 loan to buy a fishing net and his income grew to $20/day within a matter of weeks”
Clark Varin, Co-Founder of Muvule
When Helping Hurts
From 1970 to 2000, the period when aid flow was the highest, an estimated $2 trillion was donated to Africa and poverty rose from 11% to 66%. The USA used to give away free rice in Haiti, which put the rice farmers out of business so that when the program was pulled more people were left hungry than before. Toms shoes drove a truck of free shoes, putting the local shoe makers out of business. When the truck never returned, more people were left shoeless than before.
Programs where free money, food, or clothes are distributed without a strategy for long term sustainability or accountability will not only fail, but tend to leave communities worse off than before. This is because donations often create dependency and moral hazard–the people receiving God’s grace don’t appreciate it, because it came to them for free. The only long-term strategy to help feed the hungry, cloth the naked, or house the homeless is real economic growth, which is not possible through donations.
The Future Of Poverty Alleviation
The only way to transform a poor community is to stimulate real economy development and the only way to stimulate real economic development is by empowering entrepreneurs to start businesses and create jobs. Poor countries do not have a lack of entrepreneurs, they have a lack of resources. Someone who makes $3/day is naturally entrepreneurial–they need to be, just to survive. These people have dreams of what they would do and how they would make money if only they had the resources, but the cycle of poverty makes it impossible to achieve these dreams
By providing these entrepreneurs with the resources they need, it unlocks their potential and allows them to pursue their dreams. Unlike with the failed donation programs above that were ideas from foreigners, microloans leverage the innovation of local entrepreneurs so that resources don’t go to waste on programs that people never really wanted in the first place.
A Refreshing New Approach To Tackling Poverty
Microloans offer a more sustainable solution for economic growth, and this is where philanthropists and impact investors can make a tangible difference. Instead of donating a t-shirt, which will not last, give a loan to the local tailor to buy cloth so that they can make their own clothes. By supporting a local business you don’t just feed someone for a day, you feed them for a lifetime, and the work that they do benefits the entire community.
But do the loans really work? Yes. And the proof is that 99% of Muvule borrowers pay their loans on time. Furthermore, once a loan is fully repaid, that same money can be redistributed multiple times to different borrowers throughout the community, creating a ripple effect of positive change.
How Muvule’s Microloans Work
Loans Designed For Female Market Vendors
In Uganda alone there is +$300 million of unmet demand from market vendors who need money to buy inventory, expand their shops, or extend their product lines. This is our core customer with an emphasis on women, especially widows and single mothers, because they have more need, yet tend to be more creditworthy and give back more to the community.
- Duration: 4 Months
- Avg Size: $150 USD
- Clientele: 90% Female
- Purpose: Business Development
How We Use Community Accountability To Encourage Repayments
Instead of lending to a single individual, we lend to a small group of individuals who guarantee each others loans. We call these groups “Women Trust Groups”. By lending to a small group, everyone in the group is responsible for making sure that payments are made on time. This encourages community accountability, because if one person in the group fails to pay, the other people in the group must pay that person’s portion of the loan for them.