Can Online Investing End Poverty?

“Invest Wisely. End Poverty.” This is the goal of eBay’s new online microfinance investment marketplace, MicroPlace. While online microlending has been growing more popular with peer-to-peer offerings such as the non-profit Kiva.org, MicroPlace is charting a whole new course in the microfinance industry, offering socially-minded Americans a new way to offer microloans to entrepreneurs in the developing world. As the only broker-dealer in the microfinance arena, MicroPlace is the first and only online service offering a way for investors to invest in the working poor, and earn both a social and financial return on the investment.

On March 19th, a panel of experts on social development and microfinance discussed MicroPlace’s potential to reach everyday investors in the United States, as well as the opportunity to help people in developing countries. The event also touched on the larger themes of microfinance policy and fighting poverty, including how loans provided by microfinance institutions can help the working poor come out of poverty and begin to realize the possibilities of longer-term assets such as a thriving business, home, and nest-egg for retirement, as well as the systemic and institutional challenges the microfinance industry faces in reaching the world’s poor.

Tracy Turner, founder and General Manager of MicroPlace, began the discussion by stressing the need for the microfinance industry to be profitable in order for it to be sustainable. One way to help achieve profitability is for individuals to think of securities based on the performance of microfinance institutions (MFIs) as a new “asset class” — along with stocks, bonds, property, and other types of assets.

After Turner introduced MicroPlace, Shari Berenbach, Executive Director of Calvert Foundation explained the nature of her organization’s cooperation with the website. Calvert Foundation is an issuer of a number of the securities offered on MicroPlace, essentially acting as an intermediary between the microfinance institutions seeking loans and the investors in the United States and elsewhere seeking investments. Calvert Foundation is also responsible for ensuring due-diligence is done on the MFIs that it lends the proceeds from the purchase of the securities to. Next, Robert Mosbacher, Jr. President and CEO of the Overseas Private Investment Corporation (OPIC), explained how OPIC, a government agency, guarantees the securities that Calvert Foundation sells to investors through MicroPlace.

Kate McKee, a senior advisor to CGAP, a consortium of microfinance funders, subsequently offered MicroPlace a few kudos and a few quibbles. The kudos included: working hard to get the regulatory compliance “right,” and educating potential investors about difference in poverty from country to country. At the same time, McKee said she had a few concerns, including about the potential of MFIs listed on MicroPlace to be harmed by financial crises, natural disasters, political instability, and mismanagement of funds.

Looking ahead, MicroPlace’s Turner said that after spending the past year building the regulatory infrastructure and “back-office” capacity of the website, the company is turning its attention to improving its user interface. Changes will include providing investors with more search criteria by which they can choose their investment, such as which institutions offer the highest rate of return and which offers loans primarily to women and/or the “poorest-of-the-poor.”

The Global Assets Project of the New America Foundation, along with Calvert Foundation and the Overseas Private Investment Corporation (OPIC), with the support of the International Gateway at the Ronald Reagan Building and International Trade Center, cordially invite you and your colleagues for a special event discussing one of the newest innovations in asset building and poverty reduction.

Participants
Welcoming Remarks

• Susan Sylvester
  Director
  Ronald Reagan Building and International Trade Center

• Jamie M. Zimmerman
  Deputy Director, Global Assets Project
  Asset Building Program
  New America Foundation

Featured Speakers

• Tracey Turner (Power Point Presentation)
  Founder and GM
  MicroPlace

• Shari Berenbach
  Executive Director
  Calvert Foundation

• Robert Mosbacher, Jr.
  President and CEO
  Overseas Private Investment Corporation (OPIC)

• Kate McKee
  Senior Advisor
  Consultative Group to Assist the Poor (CGAP)

Moderator

• Ellen Seidman
  Director, Financial Services and Education Project, Asset Building Program
  New America Foundation