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If you talk to a man in a language he understands, that goes to his head. If you talk to him in his own language, that goes to his heart.
Nelson Mandela

Blog (Tag: Economy)

4 February 2014

Every quarter I receive that wonderful email from my bank telling me that my interest rate has been 'adjusted'. All I notice is that my interest rate is slowly reaching 0. As it stands interest is already lower than inflation, so the situation isn't too bright.

Luckily I have been playing around and entertaining myself for a few years now with a service called MyC4. MyC4 is an online platform that allows people to give loans to African businesses for a slightly more optimistic interest rate than your bank. And you can already start with €5!

So how does it work?

Fruit stalls in Accra, Ghana

Business owners (mostly small businesses) apply for a loan to a credit provider in their country. They make a case for their loan, and request a certain amount of money.

The credit provider then publishes the loan on MyC4, and investors can start lending money.

The platform works through a bidding system. The loan applicant has a maximum interest percentage they can accept, and once the full loan amount has been put forward, the lowest interest rates win. So my €50 at 10% interest will knock a €50 loan at 12% off the list. That way the applicant can get the loan at the cheapest possible rate.

Once the loan is funded, the applicant gets their money, and the repayments start. Of course your shares with each repayment depends on the money you invested into the loan.

If 10% or 12% sounds too good to be true, you're right. There are a few catches of course:

Currency exchange is one of them. Since these loans are in countries with high inflation figures that fluctuate drastically, you will almost always lose some money on the exchange. The loans (and repayments) are nominated in local currency, which would probably devalue (relative to your own, harder currency) over the term of the loan.

Another risk is of course that the loan gets defaulted. It can of course happen that a business fails to pay back the loan. If this happens, you will not see the rest of your money.

But even considering these risks, I am now doing quite well. The loans I currently have running are on track, and I am receiving about 6-8% interest on them.

In the end your goal should not be to become rich, it should be to have fun. And how can spending €5 or €10 on a small business in Kenya, and watching the €1.20 monthly payments come in not be fun? So stop hesitating, and go invest now!

To get you started, I'll offer a deal... The first 5 people who share this post on their Facebook wall will receive €5 from me to invest through the MyC4 platform!

Tags Africa, Development, Economy, Micro-finance
8 December 2013

Anyone driving around at night in The Netherlands lately will have noticed that it is considerably darker than it used to be. Why? Because the Dutch government implemented one of their many plans to save money and help us out of the economic recession. Apparently turning off the lights on the motorways at certain hours in areas where there is less traffic will save us € 35m annually. € 35m, a very large sum of money that was being used simply to keep the asphalt lit. The first thing that came up in my mind when I heard this news was: "Why only now?".

Why did we need a recession, 4 years of a recession before someone decided that we are wasting money with a solarium for empty tarmac? In some northern provinces, and many countries around the world, it is perfectly normal to have unlit highways.

This is a classic example of how a crisis can lead to innovation. Rahm Emanuel said "Never let a good recession go to waste", and he was right. We apparently needed to brainstorm for ways to improve the economy for 4 years before someone thought of this idea.

Maybe that's a lesson for all of us... Instead of just thinking how we can get more clients, bigger projects and in the end more money, maybe we should imagine what we would do in a crisis. What if your product suddenly is offered for free by Google? What will you do then? Innovate, and you will more forward!

"If you're not moving forward, you're standing still."

Tags Efficiency, Economy