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One of the most principal decisions when it comes to taking out a new advance, is whether to opt of a secured or an unsecured loan. Before we argue the ...

ATL Shawty!

Campus. It was exciting. It was my first step to really working toward my dream. I didn't know anyone in Atlanta and didn't care. Once we were finished moving my stuff into my dorm room my mom was completely speechless when I told her I wouldn't be joining her, my aunt and sister at the hotel that night. I knew it seemed cold but I couldn't take the chance of missing one moment of my new start. I had no idea who my new roommates were or where the nearest MARTA station was, which is the mode of transportation I was instructed to use to get to and from school, and I didn't have a clue what I was in for, but I couldn't take the chance of missing out on one moment of it or being swayed by so I could start right in on all design core courses. First was beginning sewing and I hadn't sewn in years but I excelled in the course. The professor assigned a skirt that had to be completed step by step within two weeks. I completed mine in three days. I asked her could I make a jacket to match the skirt. She said it may be to advanced and may throw off the rhythm of the class if I was working on something completely different than everyone else, but I persisted and she finally complied. The course required us to make a simple cloth bag, a skirt with an in-seam zipper and a short sleeve blouse. I had been called and over-achiever before but I revelled in exceeding expectations in my design courses. I loved design school and Atlanta, and that first year of classes went by incredibly fast. There was no way I was going back home so I talked to my dad about asking my uncle, his brother, if I could stay the summer with him and his wife in Atlanta. My dad and uncle discussed it and said it was no problem for me to stay the summer, but I don't think they discussed it with my uncles' wife. " them. Needless to say, staying with them was a huge mistake. I think I was there maybe a month before I had to call my mom and ask her to come retrieve me before I ended up on the streets because I didn't have the $500 a month required rent, that I had no idea about prior to me going to my uncles' house with all my stuff, but was now being demanded from me by his wife. My mom came and got me, ready to kill my uncle and his wife, which I loved her for. Of course I'd seen her mad before but she had a look in her eye that said she was ready to lay hands on someone, and I think I had only seen that look once before. I was home a little over a month and the time flew past. I never unpacked, and when we were loading the car with my things for me to return to Atlanta my mom commented that she was tired and wanted me to drive first. It usually took us about thirteen hours to make the trip between Detroit and Atlanta. Nine and a half hours later my mom woke up and we were sitting in the parking lot of the dorms. I was so happy to be back in the The first class of my new schedule was draping. If I liked pattern making, I loved draping. It was the fastest way to see folded yards of fabric transform into wearable art. On top of that, draping was so organic. We were required to start off with a sketch and try our best to replicate it on the dress form. It was so hard to stick to the sketch. I always deviated from the plan. I got good reviews from my professor but she warned me that in the "real" world of fashion design an employer may not look so favorably on me submitting one design and turning in a completely different one. Whatever. I also took a second fashion illustration course which I was thoroughly enjoying until one day there was a knock at the classroom door and my professor handed me a note. "Please report to the financial aid office to discuss your outstanding balance." Attached to it was a copy of the bill detailing the tuition balance I owed to the school. I had dealt with my share of financial aid woes at my former school. There they would cut off your cafeteria meals if you owed money. They would keep a list at the cafeteria door of students who needed to immediately report to the financial aid office. So, there you were, humiliated, being denied access to your portion of a sub-par meal. My sister and I were in the same financial Once, when we went to the financial aid office to plead our case, which we had done at least twice a year since we got into the school, the financial aid director called us in (they started calling us in together once I enrolled) and demanded payment. Most people take one of two attitudes when faced with the demand for payment of a debt, particularly if they don't have the money to pay: , the financial aid officer, demanded payment and we gave our usual explanations of why we couldn't pay, he angrily and aggressively asked for our mother's phone number to call her and ask her for tuition payment. I didn't know why he would want to do that. My sister and I looked at each other wondering if we should warn him because he had no idea who he was asking to deal with. I don't know who smirked first, her or me, but our thoughts were "Where is she now," he grunted. Simultaneously we answered, "At work." Then he asked for the phone number and my sister rattled it off. Now, we could have told him ahead of time that our mother worked in a prison. We could have told him that she had worked as a corrections officer for almost twenty years and didn't take crap from anyone, especially bill collectors. We could have warned him that we had seen this woman bring a car salesman to tears because she had given him that difficult a time during their negotiations to get her into a new car. We could have told him that she beat down a crackhead who tried to steal that same car while she waited in line to pay for gas and after filing a police report still went to work and made it on time for roll call. ( from your daughters' school and I'm calling about the outstanding tuition balance that is owed for your daughters." That was it. He had started the phone call with gusto and zeal to collect. He wanted answers and tuition and he wanted it now. But as we sat there in his office we watched his face as his determination began to deflate like a punctured balloon. Within the span of the five minutes he was on the phone listening to her his face transformed from stern, to defeated, to what looked like shame as if he had been scolded like a child. We knew that look. I almost felt sorry for the poor man, but he got what he asked for - her work number. He didn't say anything else the entire time he was on the phone. I don't even think he said goodbye when he hung up the phone. The three of us just sat there in silence. He was visibly shaken. Then finally he broke the silence when he said slowly and deliberately, "We'll work together to figure out something for you girls." by this time had leaned back in his chair as far as his seat would go. He looked like he was trying to catch his breath. He waved us out of his office, practically whispering, "Yeah. Just go." We ran to our room to call our mom to see what she had said to him. When we got to the phone there was a voicemail message from her, short and to the point. I knew this trip to financial aid at this school wouldn't be as eventful. When I got there the counselor first gave me yet another copy of the bill of how much money was owed to the school and let me know that she could only give me to the end of the semester to pay. I had received a scholarship from my church to help pay my tuition, but apparently it had only helped up until the end of the previous semester. Of course she suggested what all financial aid counselors suggest - take out a loan. For me that wasn't an option. Pursuing my bachelors I had already taken out thousands in student loans and I was not willing to add more on to the mountain of student loan debt I had already accumulated. I was already taking odd jobs here and there to make money, but now I knew it was time to get a real gig. So I went to the career center and as I looked through the ads for jobs nothing really jumped out at me that would fit a budding fashion designer trying to take over the world. Then one ad finally caught my eye. An internship at The Chase Records. I took down all of the information and applied. One of the career center assistant-helper-persons felt the need to inform me that over half of the school had already applied for that internship and no one had got it yet. I didn't let her words phase me. I felt more of a sense of urgency to send in my application after her warning. Two weeks later my phone rang and it was an assistant calling to interview me for an internship in the marketing department of The Chase Records.

Source: I just wanted to be a fashion designer!

Kiva, Interest Rates, and Africa

Kiva, Interest Rates, and Africa

— July 20th, 2009 —

africa + entrepreneurship

Lately, on the Africa team at Kiva.org, I have been involved in a enlightening conversation with other lenders about such topics as high interest rates for entrepreneurs borrowing from Kiva field partners (lender organizations) to how Americans can learn more about Africa.

I just thought I'd fill y'all in. Well, since the team posts are only viewable by Kiva members, I will only quote my additions. Prior to mine, there had been a few posts about Kiva now lending to entrepreneurs in the US (probably posted by a troll ), about loaning to entrepreneurs who sell alcohol and soft drinks, and finally, about the discrepancy between the 0% interest rate paid on loans through Kiva to their field partners by lenders, like me, and the actual interest rate paid on the loan by the real borrowers. To a mere mortal, this discrepancy appears very high as some borrowers pay interest rates as high as 28%.

It was then, and only then, that I chose to come down from my throne in economics heaven and enlighten my fellow lenders about the international economy:

"I wonder if the entrepreneurs, even the poorest of them, ever log on to Kiva at an internet cafe and get a chance to read these messages.

I can't imagine how its like, having worked so hard to provide for family and kin and suffered the stresses necessary to qualify for a "small" loan, only to learn that those financing their lender made decisions based on seemingly irrelevant factors, such as whether Kiva should loan to Americans or if one of Kiva's partner organizations is charging higher interest.

Honestly, I think the biggest of all problems involve international development within the current economic world order, the myths of democracy, the lack of education of Africans, the lack of education of non-Africans about Africans, and, well, the mother of all: colonialism, post-colonialism, and its effects, such as social, political, and economic dependence upon quasi-government organizations and modern world-systems.

In my opinion, Kiva is a very dirty and quick fix aimed at supplying just one demand of a battered market; that is, economic capital for entrepreneurs in developing nations and states. So, unless someone has a better idea of how we should to approach this problem or is at least is willing to dive into the real mess that Kiva is cleaning up, or unless we discover that Kiva is a massive hoax or confidence game, preying on our innocent naivety and idealist delusions and efforts to save the world, I suggest that we all keep lending.

No offense, but if I had enough money to make over 100 loans in 2 weeks, all worth at least $25, I would consider more serious and direct investment in Africa. I would love to see Kiva become a gateway to real investment in developing nations, not just a casual pastime."

OK. I was a bit harsh, but still respectful, right? Still, who cares. I was around a ga-zillion times less aggressive than I am on this blog.

A couple days later, my post prompted a friendly response from one of the other Kiva lenders participating in the conversation. They essentially said that they appreciated the comment by me and was only concerned with the high interest. And also that they wanted to learn more about Africa.

So, I realized that I had actually not explained anything about the high interest. So, I sat down and wrote a comprehensive explanation. Now, I could be wrong here, I only took a few courses in international economics both at Rochester and in Ghana. But to the best of my knowledge, I believed that the "high interest" rates that was being discussed were not actually high. So, I responded:

"I actually enjoy this conversation and there's no reason to apologize for your views or opinions. None of this would have existed without them.

Kiva does list the average interest rate the borrower pays for each partner organization. Just click on the link for the partner organization to see more information about it. Kiva also does a good job, I believe, in selecting credible lenders with relatively and, to be honest, ridiculously low interest rates compared to other lenders in those countries.

Currently, the average rate for all Kiva field partners is 23.28%, I assume with respect to the actual loan. Whereas a typical interest rate on a US credit card after a promotional period is 29.99% APR with an effective rate of 34.96% APY if compounded daily. After one year, if the amount borrowed is $1000, the Kiva entrepreneur pays $232.80 interest and the US citizen pays $349.60 in interest... $116.80 more! The US citizen's interest, however, increases or decreases with the length of the term because it is a credit card. Loans in the US, if you can get one now a days, have much lower interest rates for a good reason. If the Kiva entrepreneur's country had a more stable economic system, less inflation, and more exports, the supply of credit offerings would increase and the price of a loan (e.g. interest) would decrease. All of this depends on the state of the world economic order which, like I said, is the mother of all problems facing entrepreneurs within these countries.

None of this is to suggest that I think your concerns with the interest rates are illegitimate. All I am saying is that I wouldn't let this fact influence my decision to loan on Kiva. Especially given the financial, economic, political, social, and cultural differences between the countries, or, in respect to US entrepreneurs, the communities where those entrepreneurs reside, and mine.

To play devil's advocate, I would like to point out another reason why these lenders may be right to charge higher interest rates than in the US. In order to survive and keep lending, Kiva's partner organizations must adhere to solid financial and economic fundamentals. Naturally, "poorer" countries with weaker currencies will either: 1) have set higher interest rates with monetary policy similar to the way the "Fed" sets the interest rate in the US or 2) have spiraled out of control and into massive debt and corruption indicated by inflation or hyper-inflation and exacerbated by printing large amounts of money. Obviously, a good lender resides in a country that falls into category #1. In order to escape comparatively high interest rates the lender could attempt to operate solely in US dollars. However, even in this unlikely event, the entrepreneurs they loan to cannot operate as such. They would still have to make up for the real value of their depreciating currency, in respect to the US dollar and deal with its influence on the exchange and interest rates in that country over the lifetime of the loan. Therefore, the entrepreneur cannot escape the high price of a loan and will always have to pay back much more money than they borrowed. Furthermore, any good lender will want to make profit to keep their business running. Well, unless they wanted to be taken over by a potentially corrupt government or overrun by Western enthusiasts working for some NGO with offices thousands of miles away.

Finally, I agree with you that money can't change the world on its own. I believe that all types of capital are necessary to promote such development: human capital (people with skills), intellectual capital (information and knowledge), social capital (valuable networks between individuals and groups), and many others are all necessary.

By direct investment, I mean providing more than loans. That is, taking actual ownership, with all the costs, benefits, and heightened risks associated with it such investments, in foreign enterprises. Kiva is set up to be a very safe environment and it works well because most people rightfully do not have the stomach for real investment in these countries. There are good reasons why we aren't all throwing our money at every idea that comes out of TED. Nevertheless, Kiva is still not real investment. If you have the resources, time, and patience to put up with the many frustrations that will occur on every turn, you can invest in Africa or any other part of the world, much like you can invest in Microsoft or the S&P.

Now, do I have any specific suggestions on what to invest in Africa? No. But, hey, I just got out of school. Next year, I'm finally moving back to West Africa for a few years. So give me 18 months and I'll either have a long list of recommended FDI organizations in West Africa or have my own.

Meanwhile, if you want to educate yourself on Africa, I suggest starting with current events by reading BBC News on Africa. The whole "people in Africa are poor, people in Africa need help" stuff is so cliche and, as you mentioned, doesn't make you feel like you know anything about Africa. My best advice is to remember that the road to enlightenment is not a highway. You don't have to obsess over the wars, devastation, destruction, or amount of poor people in Africa. There are enough people in the world who truly care about these problems much more than you do and that are probably better equip and more effective at solving them. Find your niche, something that really interests you and, well, also happens to exist in Africa. Find something that relates to your real life and your occupation. From there, you'll develop an African experience that you can actually connect with. You'll then be able to communicate your African experience with others as well as share yourself and your capital with Africans more efficiently. As for me, I follow African politics, economics, business, law, and technology. Africa's a big continent, so I'm sure you can find something of real interest to you there, no pun intended."

You see, I think that if you Googled the interest rate set by the national bank in any of those "poorer" countries, you would find out that it either matched or was very very close to matching the interest rate the borrowers paid back to Kiva's field partner in that country.

However, this all goes topsy turvy when loaning to entrepreneurs in America, since the interest rate in America is next to nothing. In America, the real reason why an entrepreneur cannot get funding is because their credit sucks or they're asking for either too much or too little amounts money AND their credit sucks. Haha!

Unlike in other countries, Americans have high access to credit. They just suck at obtaining and maintaining it. Let me clarify my reasoning. First, any college student can get a credit card with 0% interest for the first 12 months and a $500 limit. Therefore, any college student already has access to enough money to fund their business project.

And I'm not just referring to Ivy Leaguers or rich people. My first year on campus, credit card companies were throwing everything at me to sign a piece of paper or get my friends to sign that piece of paper applying for a credit card. I got a new card in the mail each week. In fact, when I didn't use my credit card for a month, I would get $25 checks in the mail... REAL MONEY! They would say something like:

Of course, not everyone is a "G" like me, so, well, they probably did spends loads on credit. Well, actually, I did too! My freshman year, I used my card so much online that I knew my number, all 13 digits, by heart! I knew my security code by heart! I even had a secret code and a song to assist me in remembering it... just in case I was at the ITS center late at night and some Chinese food. The difference between me and other students: I didn't go on expensive trips AND I had a JOB! Even with that, I had a car my third year, which, of course, I broke down halfway through my fourth year. But, throughout the one and a half years, I racked up a huge balance, $8,000, on multiple credit cards prior to my first trip to Ghana. Needless to say, I changed from my evil ways.

I now have no balance at all. In fact, I have spotless credit, y'all. Even though I racked up thousands, I never ever missed a payment... on purpose. The company mailed it to the wrong address twice I think, and so, I got them to waive the fee. Well, only one company. Chase Credit, you bastards, screwed me over by sending the bill to the wrong address WHILE I was in Ghana and the stupid black lady on the phone didn't want to waive the fee. So, I told her that I would pay everything off and close my account in less than 24 hours... never to use the service again... needless to say, I did. Darn credit cards.

Anyways, back to the topic. Like I said, Americans can get credit. They just don't know how to act when they get it. They treat it like free money. They mortgage their houses to buy fancy cars and lose jobs to buy boob jobs and other jobs with the letter "B". So, if I were to agree with any of the Kiva debate so far on the Africa page, I would agree that Americans probably don't need loans.

Nevertheless, certain demographics do. By this, I mean poor, typically immigrant or minority, working women entrepreneurs in urban areas. These women tend to be hard-working and tend to use their profits for good use, like paying for their kids to go to school. Unlike the men, who spend their revenue on prostitutes and go bankrupt, women entrepreneurs actually succeed in urban areas. However, this is less of a testament to the success of America than it is to the dexterity inherited from homogeneous chromosomes.

Overall, I suggest you join Kiva, the Africa team, and the conversation.

I'm off topic again, so I might as well just end.

Source: My African Voice