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Estimates are that by 2005 one billion portable Internet connections will be deployed around the world – be it through cell phones, pagers or Palm Pilots. And by 2010 there’ll be about three billion – so many in fact that 100 million toasters should be online by then. Why not? Finland is already putting phones in Coke machines – you can charge your drink to your home number – and the company Digi Scents plans to deliver smells over the Internet by sending data to a Snortal attached to your PC, which would on command mix different chemicals to recreate various scents. Look around: anything with electricity is being reinvented to carry software and become networked. That’s the future. Even for your toaster.

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Building A Global Social Safety Net


Microfinance in Cyberspace


The Power of Small Change


A Gallant Initiative


I picked up such futurology not at an Internet trade show but at an Aspen Institute seminar on poverty, headed by Nelson Mandela and Jimmy Carter. The question participants were asking was this: can any of this whiz-bang Internet technology by used for alleviating poverty?

The answer is yes. "The Internet scales like no other technology," argues Allen Hammond, the senior scientist at the World Resources Institute. "One education Web site translated into Hindi, Mandarin, Swahili and Spanish would have a potential user base of two billion people. It can help even the poorest people invent their way out of poverty."

How so? Consider the Web site The brainchild of a French banker, Jacques Attali, PlaNet Finance works like this: roughly 1.3 billion people live on a dollar a day. One thing we know is that one of the most effective tools for combating their poverty is micro-lending. Micro-loans range from $10 to $1,000. They go mostly to women and are given without any collateral. Micro-loan recipients use them to buy everything from sewing machines to cell phones the whole village can use, to beauty supplies to start a salon in a Bangladeshi slum. These people have the will to better themselves, they just don’t have the basic cash, and that’s what micro-loans provide.

While people who need micro-loans are not online today, many of the micro-banks and aid organizations that work with the poor do have computers and can get online. What PlaNet Finance is doing is wiring the 7,000 micro-finance groups around the world into a network that holds huge possibilities.

"First," says Mr. Attali, "PlaNet will connect as many micro-banks as possible so they can share solutions. Second, we will help those that are not online get online, as we did in Benin. Third, we are creating a system, like Moody’s that will rate micro-banks according to their ethics, how well they serve the poor and financial efficiency. Fourth, we are setting up a university online to teach best practices to micro-banks, and an online marketplace for micro-loan recipients to sell their crafts. Finally, we are creating PlaNet Bank, which will extend lines of credit to micro-banks and will enable anyone to come to our Web site, donate money to selected projects offered by the best micro-banks, and then track whom that money went to and how it is used."

If PlaNet can really rate and link all the micro-banks, it could help them lower their biggest cost – tracking and processing all these little loans. The idea is that a single micro-banker, armed with the sort of information device that FedEx uses to track your packages, could keep track of hundreds of loans and payments at a time. If the processing and transaction costs of these micro-loans can be reduced, they can be bundled together and sold on a commercial basis to the Citibanks of the world. Micro-banks usually charge 4 to 5 percent interest a month, so this market would appeal to big banks – if the processing costs were cut. And that would change everything, because right now there is great demand for micro-loans, but their cash pool is limited to donations. With $ 20 billion in commercial loans from big banks you could provide micro-loans to 100 million people living on $ 1 a day.

That’s how you change the world – get the big market players to do the right thing for the wrong reasons.

"There’s an old saying: ‘Feed a man a fish and you’ve fed him for a day. Teach a man to fish and you’ve fed him for a lifetime", says Mr. Attali. "Well, we have millions of poor people who know how to fish. They just don’t have a pole. Through PlaNet we might be able to get poles for a lot more of them."

By Thomas L. Friedman.
Extracted from The New York Times
November 3, 1999

Microfinance in Cyberspace

JACQUES ATTALI is a Frenchman with big ideas, best known for setting up the European Bank for Reconstruction and Development, and then leaving under a cloud over his extravagant taste in marble. Microfinance-the process of lending small amounts of money without any collateral, to help poor people to become entrepreneurs-is one of the trendiest areas of international development. And the Internet is, well, the Internet. With these three ingredients, it is perhaps not surprising that PlaNet Finance – Mr. Attali’s grand idea to use the Internet to promote microfinance — has made a big splash.

The concept is appealing. There are about 10,000 microfinance institutions (MFIs) worldwide. Some, notably one industry pioneer, Grameen Bank in Bangladesh, have become large, cyber-savvy organisations (a Grameen subsidiary is one of Bangladesh’s biggest Internet service providers). But others are hampered by their remote location and a lack of funds and trained personnel. Mr. Attali’s idea is that many MFI requirements—information, training, systems support, rating and capital-could be delivered online.

Founded in 1998, PlaNet Finance (www.planetfinance.ofg) aims to do just that. Although it is still a tiny organisation-4 paid staff and 16 volunteers in its Paris headquarters-its goals are ambitious. Its rating service, PlaNet Rating, analyses microfinance sectors in individual countries. So far, it has looked at four countries and evaluated nine individual MFIs. There is also a training service, launched on a pilot basis last month, when 50 practitioners in 15 countries took part. An information service, PlaNet Library, lists 2,000 microfinance organizations, and there is a technical support group, PlaNet systems, which has sent computers to Benin and mobile phones to Bangladesh. There is also a mechanism for the public to make online donations to specific microcredit institutions. And, most controversially, plans are afoot to launch PlaNet Banks next year. This "bank" would raise money in the capital markets and, eventually, offer loans, guarantees and equity capital to MFIS.

The biggest scepticism, however, surrounds PlaNet Bank. Now that microfinance has become such a trendy area of development, cash is less of a problem. The World bank estimates that between $400m and $600m of donor funds are earmarked for microfinance every year. And, given the premium on "socially responsible" lending, big banks are trying desperately to find ways to support microfince. But it is hard to reach small, remote institutions: and even harder to expand them quickly. So PlaNet Bank may be addressing the wrong problem. The main shortage facing today’s MFIs is not of capital, but of institutional capacity. With luck, the Internet could help to cure that. But the last thing microfinance needs is more money unthinkingly thrown at it.

Extracted From The Economist,
27 November, 1999