Lendahand Blog

Impact

How to earn money while fighting extreme poverty

Fighting poverty worldwide and making money out of it – seems quite contradicting, doesn’t it? In the past seven years, we’ve learned that it’s possible. In order to understand how this works, let’s first have a look at how poverty arises and how it stays in tact. 

Poverty is still a big global problem. Ending poverty is the first Sustainable Development Goal of the UN, which is a good indicator of exactly how big this problem still is. 

What causes poverty?

Poverty is the result of long periods of unemployment and not having a safety buffer to cover expenses. People are then no longer able to fulfill their basic needs. When a job opportunity comes up, it often doesn’t pay enough to cover all the expenses – things like serving dinner, getting an education and going to the doctor need to be prioritized against each other. Because of the lack of education and health care, the problems grow up until the point where people can’t fix it themselves anymore.

The difference between donating and investing

There are many organizations that donate money to people in poor countries. While this type of emergency relief is crucial, especially in times of natural disaster or health crises, it’s not a durable way of fighting this problem. A better alternative is investing money in local entrepreneurs. This way, businesses have the opportunity to grow, hire more employees and provide for their local community, all while you get a return on your investment.

SMEs create the most jobs

Research by the World Bank has shown that most jobs are created by small and medium-sized businesses. However, SMEs often have to depend on funding in order to grow and create new jobs. In many parts of the world, that’s an issue: entrepreneurs don’t have access to (affordable) funding. What’s up with that?

Why medium-sized don't get a fair chance

In the West, we have a system where banks provide funds to entrepreneurs to grow their business. This can be a loan of ten thousand euros, but it can also be an amount of over a million. In many poor regions, medium-sized companies don’t even have the chance to receive affordable loans.

Banks find these companies too small to provide a loan to and even if they’re big enough, they have to pay a ridiculously high interest rate. At the same time, these companies are too big for microfunding. 

Therefore, these businesses resort to so-called ‘’loan sharks’’. These sharks provide loans at interest rates that go up to 100% per month.

By giving this group of entrepreneurs access to affordable funding, our money makes a big difference!

How does Lendahand work?

With Lendahand, you invest in SMEs in emerging markets, together with the other investors on the website. The contributions of each individual investor put together creates an enormous difference for these people. Together, we enable SMEs to grow. By creating more jobs, we fight poverty. Will you join?

Have a look at our portfolio.