eBay moves into microfinance

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Last week eBay launched a web-site (www.microplace.com) to allow small investors (from $100) to put money into micro-finance. Other micro-finance sites exist (such as http://www.kiva.org) but this is the first one that is aimed at ordinary investors. More can be read here.

The investments apparently mature in around 2 to 4 years and pay a return of 1.5 – 3%. The interest rates charged on microfinance loans are, of course, quite high, often around 40% but sometimes significantly higher. An explanation for the high interest rates associated with microfinance loans can be found from the Consultative Group to Assist the Poor, here.

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