Zero Interest Micro Credit, how Novel

Two weeks ago I sat down in the middle of sixty business women in Mzuzu, who are part of the Mbawemi women’s Group. Many are in business already paying interest from 30 to 100 percent compound, and feel lucky when they get it. Normal lending agencies won’t touch them, so we are trying to find a way.
They had all come up with a business plan, in one form or another, and with their permission we looked at a few, offering loans from 20 to 150 euros. The whole group are responsible for defaults, even though I expect none!!
These women who are working through aids, widowhood, abuse, neglect, starvation, malaria who will have no problems with repayment if they can stay in good health. They all want to put a little away as savings and away from men who might drink it!!! – a real issue.
When asked, I explain that the world economic disaster will have little impact on my Mbawemi women.
How can you take anything away from those with nothing?
I promise I will not go down this route with their savings, I think they’re better not knowing about what happens savings in the sophisticated, developed world.
But just for your own info…..

Banks, pension savings, mortgage guarantors and all the major financial institutions on which we depend are now tied up in a web of undelivered assets. A is the registered owner of a bond payable by B, the principal on which has been credit-swapped out to C.
The terms are controlled by a deed drafted by an investment bank D, which itself receives the interest, which has been aggregated with 30 others and sold notionally to E. E is foreign, and flattens the FX risk with a bank F, who sells and rolls a future on his long currency book, which is bought by another bank for an assured profit by running the position against a higher yield bond bought from a junk-status borrowing customer, which has been insured against the risk of default with G, a major insurer, who happens also to be A.

These are the styles of relationship which dominate the world in which ordinary peoples’ savings are bound up, and they are profitable in the short term. This is why financial rather than commercial companies increasingly dominate the list of the top companies in America and Europe. They find it easier to make profits by providing credit and assuming eventual repayment, rather than by actually demanding settlement;

They say Credit where credit is due, but it’s no wonder the whole world is gone mad.


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