Zidisha Connects Lenders with Entrepreneurs in Developing Countries

Zidisha is a unique platform that connects lenders with entrepreneurs in developing countries. This platform allows individuals to lend money directly to entrepreneurs, providing them with the capital they need to grow their businesses.

By using Zidisha, entrepreneurs can access the funds they need to invest in their businesses, which can lead to increased productivity and economic growth. This is especially important in developing countries where access to traditional banking services can be limited.

Zidisha's platform is designed to be user-friendly and accessible, allowing lenders to browse profiles of entrepreneurs and select the ones they want to support. This approach enables lenders to make informed decisions about where to invest their money.

At Zidisha, the lending process is unique and empowering for entrepreneurs in developing countries. They create project pages that share their story, photos, and descriptions of their investment opportunity.

Entrepreneurs then post project updates and interact directly with their backers through the project discussion tab. This allows for a direct and personal connection between the entrepreneur and their supporters.

Backers can view which projects were funded by their entrepreneurs and watch their impact grow over time as the funds continue to be recycled.

The lending process on Zidisha is pretty cool. It works by entrepreneurs creating project pages where they share their story, photos, and descriptions of their investment opportunity.

Entrepreneurs in developing countries post their projects on the platform. They share their story, photos, and descriptions of their investment opportunity.

Backers from all over the world fund these projects. Instead of repaying the loans, entrepreneurs pay it forward by funding other entrepreneurs on the platform.

Entrepreneurs post project updates and interact directly with their backers through the project discussion tab. This allows them to keep their backers informed and engaged.

Backers can view which projects were funded by their entrepreneurs and watch their impact grow over time.

You can fund a small business for a low-income entrepreneur in Africa or Asia through Zidisha, a platform that allows direct interaction with your chosen entrepreneur via chat, photos, and videos.

Zidisha's lending process is straightforward and accessible, making it easy for lenders to connect with entrepreneurs in need.

The platform offers a unique approach to lending, where borrowers make a one-time deposit into a reserve fund upon joining, and then pay a service fee of 5% of each loan raised.

This service fee is significantly lower than the global average of interest rate of 35% for microfinance loans, which is a huge advantage for both lenders and borrowers.

By joining Zidisha, entrepreneurs like Daniel can access funding and grow their businesses, creating a positive impact on their communities.

To borrow money through Zidisha, you first need to create a profile that describes your business and personal details. This profile is then checked by Zidisha or a partner, such as a local credit bureau, to ensure you're a trustworthy borrower.

First-time borrowers are charged around $12 to cover the cost of processing their application, but this fee is only paid once and allows you to raise multiple loans through Zidisha. They also make a deposit into a reserve fund to compensate lenders in case of default. Zidisha used to verify borrowers by phone, but stopped this practice in 2012 due to fraud, corruption, and ineffectiveness.

To post a loan request, you describe your life story, the proposed investment, desired loan amount, and repayment period. Lenders then have the opportunity to finance all or a portion of the loan at zero interest.

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Borrowing is a crucial part of Zidisha's mission to provide capital to small businesses in developing countries.

First-time loan applicants must create a profile that describes their business and personal details, which are then independently checked by Zidisha or a local credit bureau.

The cost of processing a first-time loan application is roughly $12 (1000 Kenyan Shillings), which is only paid once and entitles the borrower to raise an unlimited number of consecutive loans through Zidisha.

Approved applicants post a loan request that describes their life story, the proposed investment, desired loan amount, and repayment period.

Lenders then have the opportunity to finance all or a portion of the loan at zero interest.

If enough lenders commit to lending the designated loan amount before the loan expires, the loan is funded and disbursed to the borrower; otherwise, it is expired, lenders are refunded, and the borrower may try again with a new application.

Loan values are fixed in local currency, using the exchange rate effective at the time the loan is disbursed, which means lenders bear the risk of any currency exchange rate fluctuations.

Borrowers also make a deposit into a reserve fund that is used to compensate lenders in the event of default.

Zidisha's business operations are supported by a team of volunteers, who are either interns committing 10 hours/week or volunteers committing 2 hours/week.

Interns and volunteers are typically organized by country and assigned day-to-day tasks such as email correspondence, disbursing loans, translation, and reviewing member user profiles.

The success of Zidisha's operations model is attributed to the reliability of its interns and volunteers, who consistently carry out the organization's day-to-day activities.

Zidisha's website is a great resource for learning about micro-finance operations and exploring volunteering opportunities.

Zidisha's reporting system allows borrowers to repay loans in installments, with repayments made directly to the lender.

This feature helps to build trust and accountability within the lending community.

Borrowers can also receive recognition for their progress, with a "reputation score" that reflects their repayment history.

This score is visible to all lenders, making it easier for borrowers to access larger loans over time.

Zidisha's reporting methodology has undergone significant changes, affecting their repayment and write-off statistics.

In August 2012, Zidisha reported a repayment rate of 98%, but this rate only included loans that had been repaid for 6+ months. This time lag made the statistics less useful, so they revised their calculations to include all loans whose final repayment dates had already arrived.

The revised repayment rate as of August 2013 was 89.3%. This change in methodology led to a stricter write-off policy, where a loan is classified as written off if it's not repaid for 6 months after its due date or if the borrower hasn't made any payments for 6 months.

Zidisha's write-off policy is stricter than other microlending websites, like Kiva. Kiva, for example, reports any loans not yet written off as repaid, even if they're still outstanding with the borrower.

Here's a comparison of Zidisha's and Kiva's write-off policies:

Zidisha's stricter write-off policy has resulted in a reported write-off rate of 17.6% of ended loans as of June 29, 2014. This is higher than Kiva's reported write-off rate, which is not specified in the article.

Zidisha has been recognized for its innovative approach to microfinance. It was a finalist and semifinalist for the Echoing Green foundation for early-stage social enterprises.

Zidisha's achievements didn't stop there - it was also an Ashoka Fellow nominee. This prestigious nomination is a testament to the organization's commitment to social entrepreneurship.

In 2014, Zidisha made history by becoming one of the first seven nonprofits to graduate from the seed accelerator Y Combinator.

Here are some of the categories where Zidisha has received recognition:

Zidisha's recognition is not limited to awards and nominations. It's also been classified under various categories that highlight its impact and mission:

Direct Lending is a powerful way to make a real difference in the lives of low-income entrepreneurs in Africa and Asia. Fund a small business for a low-income entrepreneur, and you'll be interacting directly with them via chat, photos, and videos.

You can choose your entrepreneur based on their business idea, location, and loan request. Then, watch your impact multiply as the entrepreneur pays your donation forward by funding other entrepreneurs in need.

By lending directly, you'll be part of a community that's changing lives one loan at a time.

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