Fighting Poverty in China Consumer to Consumer
November 19th, 2008 by Tatiana
Despite the solid entrepreneurial spirit that characterizes many Chinese, not many are able to start and expand small businesses. Access to credit is often no more than a dream for most of China’s 300 million people living below the poverty line in China. An attractive option for them is microfinance, commonly defined as small loans - as small as US$100- for impoverished individuals to help them achieve financial self-sufficiency.
Wokai.org is a “capital-contributing microfinance intermediary” trying to bring money to Chinese entrepreneurs who want to set up their own small businesses, by raising loan capital online from individual contributors for microfinance institutions (MFIs) in China. Its goal is to expand financial opportunities for the country’s poor (and mostly rural) population.
Though its primary goal is fundraising, Wokai also provides “capacity building” for microfinance organizations, which can mean anything from emotional support for first-time borrowers to computer training for loan managers.
Wokai.org American founders Courtney McColgan and Casey Wilson think that the website will not only be a fundraising platform, but also a community for people interested in supporting microfinance in China.
Through Wokai, people will be able to make loans online directly to individuals who have been selected by Wokai’s local partner MFIs. These MFIs in select clients, whose profiles are then posted on the Wokai website through profiles that outline their business ventures and loan request.
Contributors browse these profiles, select who and how much to finance, and then transfer money to Wokai through our online payment system. Once funds are transferred, Wokai distributes this loan capital to partner MFIs for allocation to micro entrepreneurs. At the end of the loan cycle, partner MFIs collect loan repayments and re-issue loans.
Like other “capital-contributing microfinance intermediaries’ Wokai is not legally a financial service organization, so it does cannot receive savings deposits, which means that the pool of money cannot grow and requires constant capital injections.
The website is scheduled to be launched in Mod-November, so stay tuned.
This entry was posted on Wednesday, November 19th, 2008 at 7:38 pm and is filed under Health & Safety, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
November 19th, 2008 at 11:07 pm
Tatiana,
Thank you so much for the shout out about Wokai! We just launched the site a few days ago, and I invite you to check it out at http://www.wokai.org/
I’d like to clarify that once an entrepreneur repays her loan, the contributor can choose the next borrower to receive the money. In this sense, the loans can be recycled to help many different people. We will continually raise money for our borrowers and for our operations, while building communities committed to microfinance in China. It’s been an incredible journey so far, and I am very excited to join our core team in Beijing in a few weeks!
Thanks again!
Leslie