NEWS WIRE: Palestine: LendforPeace.org Microfinance Platform Experiences Success

Source: Transcapitalist

Original article available here.

UNITED STATES, April 13 – A new p2p lending site connects lenders to micro-entrepreneurs in the Palestinian territories. At LendforPeace.org, lenders can make a loan directly to vetted borrowers in the West Bank and through this process, the site hopes to help “humanize the conflict” and give its users a more personal view of the Palestinian experience.

At LendforPeace.org we aim to tie the power of microfinance to the notion that economic stability is a necessary component of a lasting peace between Palestinians and Israelis.

West BankIn an discussion with me last week, co-founder David Fraga explained why LendforPeace.org is an important complement to Kiva: It reaches people who might not be drawn naturally to microfinance, but who are interested in conflict in the Middle East. The niche focus allows a different lender population to be targeted.

LFP has also introduced an innovative option not currently enabled at Kiva. Lenders can donate money to a Revolving Microfinance Fund. By allocating the money here, your money is immediately re-loaned to another worthy entrepreneur. Mr. Fraga explains that this is an important step forward in efficiency; large sums of money invested in Kiva are currently “dead capital” sitting in lenders’ accounts yet to be withdrawn or re-loaned. Also, unlike any loans made to entrepreneurs on Kiva, your contribution to the revolving microfinance fund is tax deductible in the US.

A very real concern for lenders investing in entrepreneurs around the globe is uncertainty over whose activities they are funding and whether the money is going to the intended place. In our discussions with Mr. Fraga, we are convinced that LFP has a very robust due diligence process in place for the MFIs with whom they partner on the ground and the micro-entrepreneurs:

Government vetting. Both partner MFIs of which have been vetted by USAID and comply with the US State Department’s anti-terrorism clause.
Financial vetting. The MFIs are also regularly audited by the accounting firms PricewaterhouseCoopers and Ernst & Young to ensure responsible financial practices.
LFP vetting. LFP also sends its own personnel to audit partner portfolios and to perform site visits with current and prospective borrowers.
MFI vetting and risk sharing. The local partners perform extensive due diligence on each lender and they match each loan or sign a risk-sharing agreement. This ensures that that the MFIs have aligned incentives with LFP lenders.

While the founders are focusing on the core functionality of p2p loans currently, they have exciting ideas for where to take the site in the future. An e-commerce capability would allow lenders to directly buy the goods created by their borrowers, for example, if an entrepreneur is an artisan. A discussion section would allow borrowers and lenders to communicate directly, and other interested members of the community to join the discourse.

LendforPeace.org is supported by grants from the Clinton Global Initiative, Ashoka Youth Venture, Davis Projects for Peace. The site was launched in February and Mr. Fraga was just interviewed by Fox Business News and the newscasters were practically gushing. As he argued in our discussion with him, “we [the founders–two Jews and two Arabs] may not agree about much, but it’s hard to disagree with the concept of economic development and that people shouldn’t be poor.” LFP offers a tangible and transparent way for those who are touched by the Middle East conflict, but feel frustrated that it is beyond their reach, to play a small and constructive positive role in the process.

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