Thursday, January 8, 2009

The Dis-intermediation of Microfinance


"Death of a micro Middleman" -- The Director's Cut

Occam's Razor shaves microfinance industry

Law of Parsimony downsizes micromony

Samurai Tailor frightsizes micro loans !

Zero Transaction Costs -- and not a penny more!

Fiat lux! -- Photons DIRECT to the "Bottom of the Pyramid"

Micro-enablement and Micro-empowerment a la Cell Phone

Frequent Flyer Miles & Carbon Micro Credits: An Analogy

Among a few of the "summer soldiers and sunshine patriots" reading this blog, there is a Great Confusion regarding my cell-phone-based Carbon Micro Credits (CMCs), which can be used to put any of several forms of hard e-currency or cash DIRECTLY into the hands of poor Individuals in The Developing World.

Again let me say it -- DIRECTLY. With no involvement of middlemen, no intermediaries, no MFIs (micro finance institutions), no bankers, no brokers, no hangers-on, nor other NGO or government officials seeking to "add value" or cravenly craving personal gains for themselves. Zippo for them.

Rather, courtesy of the miraculous cell phone, which even the poorest of the poor have access to in Africa and many parts of Asia, Carbon Micro Credits (CMCs) or Carbon Micro Revenue or Carbon Micro Earnings or Carbon Micro Currency -- or whatever future flatulent flattering imitators want to call them -- CMCs can appear magically in the cell-phone accounts of millions of Individuals -- like Manna from Heaven.

For a typical family in Africa using a more efficient charcoal stove (e.g., the Uganda stove), weekly Carbon Micro Credit (CMC) earnings from selling their carbon offsets could amount to US$ 0.40 to over one U.S. dollar. CMCs can be claimed weekly via an SMS message sent wirelessly, which can cost as little as 4 cents in Kenya, for example.

Do you see what I see? -- pharmaceutical margins ! when a poor family DIRECTLY sells their carbon offsets and claims their Carbon Micro Credits via their cell phone or any cell phone owned by an extended-family member or friend:

----->> Weekly Revenue = 40 --> 100 cents.

----->> Weekly Expenses = 4 cents.

----->> Weekly Profit = 36 --> 96 cents/week.

And the weekly fuel savings from using the more efficient stove? -- much more ! -- an additional US$ 1 - 2 / week.

For the so-called Ultra Poor living on US$ 1 - 2 / day or even less, these Carbon Micro Credit (CMC) revenues earned + the fuel savings represent a very LARGE increase in their standard of living.

And the Middleman?

Disintermediated ! -- Or should I spell it? -- Dys-intermediated ? Pity the now-poorer highly-misunderestimated middleman -- now dis-middleman-ated, dismandated, dis-integrated, displaced, dispossessed, financially disemboweled, dissed and disgusted to be dis-employed.

And the unwashed unholy Illicit Brood of the Middleman ? -- namely his children named Graft, Embezzlement, Theft & Usury? The chances of these devious children being spawned are also HUGELY reduced or totally eliminated as speedy and invisible photons deliver Carbon Micro Credit (CMC) earnings DIRECTLY to millions of different, Individually-owned cell-phone accounts.

Have you stolen any worthwhile photons lately ? It is technically possible, but not within the repertoire of 99 % of middlemen and thieves in The Developing World.

Microfinance is only 30 - 35 years old. Over time it will evolve as any paradigm does. Today the smart microfinance practitioner will devise self-funding, self-renewing mechanisms that permanently empower and enable poor Individuals DIRECTLY with no intermediaries involved, and WITHOUT initially indebting them.

Today the astute microfinance apparatchik will work diligently to make his own job obsolete, as any intelligent and reputable consultant does. In sum, he will disintermediate himself permanently from the microfinance food chain. Why? Because, is there ever enough food for everyone in The Developing World ?

And so why does the word "microfinance" mean "loans" or "debt" to almost everyone? Because that's how it started. But now, behold ! -- in this blog a new field, a new non-debt-based micro-paradigm is born, which could be labeled variously as:

----->> MicroRevenue

----->> MicroEarnings

----->> MicroProfit / Micro Profit Sharing

----->> Micro-entrepreneurism

----->> Micro-enablement

----->> Micro-empowerment

----->> Micro-emancipation

----->> Micro-enfranchisement

----->> Micro-disintermediation, or

----->> Micro-disfinance ?

Finally, as noted before in this blog, Carbon Micro Credits are the same as frequent flyer miles. Just as every airline in the world has a frequent-flyer program -- therefore to maximize disintermediation ! -- so every mobile carrier in The Developing World should have a Carbon Micro Credits program. It's that simple.

Moreover, let me ask: Do your frequent flyer miles indebt you? No. Are they immediately worth money, or convertible into valuable goods or services? Yes. Are they tiny in value? Yes, most major airlines sell frequent flyer miles to other merchants (to use as customer incentives), often to credit card companies for example, for around One U.S. Cent. Yes -- one cent. But do all these one cents add up to large amounts eventually? Yes. A free plane ticket to Europe? Several free nights in a 5-star hotel? Yes, one cent at a time.

Ditto should and can apply to Carbon Micro Offsets produced by the Poor. A few cents earned per day will start to keep Poverty away. So why not let cell-phone-based Carbon Micro Credits or Carbon Micro Offsets DIRECTLY fund the immediate Emancipation of the Poor in the Developing World -- without ever indebting them, and without usurious (excessive) interest burdens?

Very directly yours,

David A. Palella
Chief Carbon Disintermediationist

San Diego, CA
tel: 858-793-0741