How to increase investment in micro-enterprises (and get your money back)

by 08th Dec 2014
A scene from Lendwithcare's new Christmas animation A scene from Lendwithcare's new Christmas animation

Today CARE has submitted written evidence to the International Development Committee (IDC) of the House of Commons on our peer-to-peer lending network, Lendwithcare. (For a snappier and more entertaining overview of Lendwithcare, see our new Christmas animation.) The IDC is currently looking at jobs and livelihoods and is interested to understand more about the role that a relatively new way of funding micro-enterprises can play in generating growth and jobs in developing countries. has been hugely successful since its launch four years ago, and now supports over 14,000 MSMEs by engaging online with over 18,000 lenders who have each, on average, loaned £35, raising nearly £5 million in the last four years. These really are loans – almost all are repaid within the agreed timescale. To date, only death and major disasters, like Typhoon Haiyan, have prevented our microentrepreneurs from repaying. Of course, our committed lenders very frequently recycle their loans to other entrepreneurs, keeping money in the system and reaching more businesses.

Lenders find Lendwithcare a compelling proposition: they can choose who to lend to, based on detailed information on the individual and their business plans, they get regular feedback on progress, and they know that they are helping resourceful individuals lift themselves and their families out of poverty. And they get all of this within a web experience in their own language, culture and currency. The other compelling aspect is that, when you put money into Lendwithcare, 100% of the money goes to the entrepreneur who is borrowing – CARE does not take a slice off the top. Rather, our modest administration costs are met from other funding within CARE, and until recently, by sponsorship from the Co-operative Group.

The opportunity (and the key issue)

There is a lot of scope for expanding Lendwithcare’s operations – there is certainly no shortage of small enterprises requiring loans. And we believe that there are many more microfinance institutions out there who are likely to meet our (demanding) criteria. We know this because Lendwithcare only lends in nine countries, compared to the 80 countries in total in which CARE International works.

We also believe that there are considerable opportunities for expanding the lender community of the Lendwithcare model. For instance, we believe that it is likely to be successful in other European countries where there already exists a CARE office. As this includes Germany, France, Austria, Norway and Denmark, there is a lot of opportunity. We would also like to explore rapidly developing countries such as India and Brazil. We know that lenders find it important to link with an organisation in their own country, for reasons of language, currency, tax laws and cultural affinity.

All of which would take some more investment – but we know that we can raise loans to the value of seven times the marketing and administration investment. This is a powerful win-win-win between CARE’s mission to end poverty, an individual’s desire to use some of their own hard-earned cash to help others, and entrepreneurs’ drive to build strong businesses to lift themselves and others out of poverty.

So now all we have to do is find the cash to pay for some administration and marketing…

Gerry Boyle

Gerry led CARE International UK’s policy analysis and advocacy around value chains and dignified work. He originally joined CARE as the Senior Policy Adviser on Private Sector Engagement. With the advent of our new Global Programme Strategy which put a particular emphasis on women’s economic empowerment, his focus changed a little.

Gerry co-chaired the Bond Private Sector Working Group. Immediately before he joined CARE he worked for Oxfam as Head of Business Relations for about three years, but the vast majority of his career was spent as a management consultant including being a consulting Partner at Deloitte, where for a time he led Deloitte UK’s Consumer Business consulting practice, serving many major multinationals. Gerry's original degree was in Law from Oxford University, and in 2008 when he left Deloitte he did an MSc in Philosophy and Public Policy at LSE.

One good thing I've read

Amartya Sen’s Development as Freedom. It provides a framework for many people’s modern understanding of what is development, based on a profoundly human-centred approach rather than anything instrumental. And to check whether one personally is doing enough to fight poverty, I recommend Peter Singer’s The life you can save: Acting now to end world poverty – it’s very clear and easy to read but very challenging! Finally, Ha-Joon Chang’s Bad Samaritans: Rich nations, poor policies, and the threat to the developing world is a very readable guide to economic development which argues strongly against many of the prevailing orthodoxies.

Twitter: @gerryboyle10