Zidisha is the first direct peer-to-peer lending service to bridge the international wealth divide.

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Zidisha is the first direct peer-to-peer lending service to bridge the international wealth divide.

Kenya
Organization type: 
nonprofit/ngo/citizen sector
Budget: 
< $1,000
Website:
http://www.zidisha.org
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Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Zidisha, a peer-to-peer microfinance non-profit, connects ambitious but economically disadvantaged entrepreneurs to lenders across the globe thus allowing them to start their own businesses. What makes Zidisha unique is that there are no intermediaries. Zidisha utilizes the internet to bypass MFIs thus keeping interest rates extremely low. To apply for a loan, computer literate entrepreneurs in developing countries who are accredited by a local MFI post loan applications to Zidisha’s web-site. Ordinary web-users around the world can then lend anything up from $1.00. Borrowers and lenders can correspond directly on the borrower’s profile page. To facilitate borrower activities, college and graduate student interns are dispatched into each country to work on the ground with borrowers.

About Project

Problem: What problem is this project trying to address?

Zidisha focuses on entrepreneurs in low-income countries whose political structures do not support business growth. Currently operating in Senegal, Kenya, Indonesia and soon in Burkina Faso, Zidisha will have reached its goal when it is a ladder to prosperity for any deserving entrepreneur, regardless of location. Zidisha borrowers come from a diverse background but are all ambitious and have been under-served by the political and economic conditions of their country. Some borrowers have completed college, while others lack any formal education. Zidisha borrowers come from urban as well as rural areas and are men and women of all ages. Likewise, Zidisha’s lender community spans thirty countries and is a mix of men and women of all ages and economic brackets. A key factor in Zidisha’s success is the familiarity it has with its community. Founder Julia Kurnia lived in Senegal, Kenya and Indonesia, learning the local languages and integrating into all three communities. In this way she was able to set up a base of borrowers. Julia ensured this close relationship would continue by establishing the Client Relationship Manager (CRM) position. Typically held by college and graduate students, CRMs are unpaid interns that live with a host family in each country and acquaint themselves with the local community. Client Relationship Managers are responsible for facilitating dialogue between lenders and borrowers and aiding borrowers with any problems regarding Zidisha. In this way Zidisha familiarizes itself with needs of the community.

Solution: What is the proposed solution? Please be specific!

Entrepreneurs in low-income countries often don’t earn enough to support their families, and lack the investment capital needed to become profitable. Political and economic conditions coupled with geographic remoteness make it expensive for local banks to lend to small business owners. Often, loans also carry prohibitive collateral and interest requirements. Zidisha makes capital accessible through peer-to-peer micro-lending. Zidisha is unique because it streamlines the connection between lender and borrower, capitalizing on the small but rapidly growing number of computer-literate entrepreneurs in the developing world. Zidisha is similar to Kiva and MyC4, but unlike Kiva, Zidisha lenders earn interest on their loans, and unlike MyC4, it facilitates a relationship between borrowers and lenders. With Zidisha, borrowers themselves post loan applications and communicate directly with lenders as their business investments grow. Since Zidisha works without an intermediary, borrower interest rates are on average 8% in comparison to around 30% for Kiva and MyC4. Linking entrepreneurs directly with the international peer-to-peer lending market gives them the chance to source business growth capital far more easily and affordably than was previously possible in many countries. Thus Zidisha facilitates a relationship between entrepreneurs and individual lenders, creating a platform for both sides to benefit through a cross-cultural interaction.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Zidisha currently services Senegal, Kenya and Indonesia. Borrowers in these countries who have a perfect credit history and are accredited by a local MFI or bank can then fill out an application. In the application, borrowers detail a brief history of themselves, how much money they would like, their business plan, what they plan to do with their profits and how it will ameliorate the life of their family, a history of past loans, a grace period, and a maximum interest rate. Zidisha applies a mandatory 5% interest rate solely for transaction costs but borrowers can choose an interest rate, up to a 5%, for lenders. The mandatory 5% and the chosen lender interest rate is added to make the interest rate for the borrower, which usually adds up to 8% and no more than 10%. Borrowers then post their application on Zidisha’s website and ordinary web-users around the globe can create a “lender” profile in order to lend to borrowers. Lenders upload money through PayPal or wire transfer to their Zidisha account and then can fund as many applicants as they want from $1.00 to the entire loan. Lenders choose an interest rate between 0% to the maximum designated by the borrower. Lenders “bid” for the lowest interest rate and those with the lowest rates will fund the loan. Finally borrowers and lenders correspond directly through the borrowers “profile page.” University and graduate student interns or “Client Relationship Managers,” work on the ground, keeping in touch with borrowers and facilitating the conversation between lenders and borrowers. The relationship borrowers and lenders hold on the Zidisha website propels the organization to empower the borrowers.
About You
Organization:
Zidisha
About You
First Name

Clarissa

Last Name

Perkins

Twitter

www.twitter.com/zidishainc

Facebook Profile

www.facebook.com/zidishainc

About Your Organization
Organization Name

Zidisha

Organization Country

, VA

Country where this project is creating social impact

, RV

How long has your organization been operating?

1‐5 years

Is the project that you are entering related to this organization?

Yes

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Innovation
What stage is your project in?

Operating for 1‐5 years

Share the story of the founder and what inspired the founder to start this project

The idea for Zidisha sprang to life when Julia Kurnia was just twenty-six. The inspiration came to Julia while she was living on a fisherman’s roof in Senegal, West Africa. Julia was in Senegal helping to found the world's first microfinance institution built on capital raised through peer-to-peer lending. She recalls forming the idea of Zidisha late one night in a cockroach infested room as she uploaded borrowers to the institution’s website right before its big break-through. Julia subsequently spent four months in Kenya researching ways to integrate mobile phone money transfers for a peer-to-peer microfinance lending service based in Denmark. These experiences laid the groundwork for the founding of Zidisha in 2009. Julia now works as a Portfolio Analyst for the U.S. government at the United States African Development Foundation in Washington, DC. She saved $5,000 from her job to launch the Zidisha website. She works on Zidisha (and takes care of her new-born baby boy) in the evenings. Julia has lived and worked extensively in Africa, Latin America and Asia and speaks over a dozen languages including Indonesian, Swahili, and the West African language Wolof. Her in-depth knowledge of foreign languages and economic and political structures and cultures has helped her lay the base for Zidisha.

Social Impact
Please describe how your project has been successful and how that success is measured

Since it was opened to the public in January 2010, Zidisha’s momentum has only increased. Zidisha measures its success in businesses financed, number of lenders, amount of funds uploaded and access to Zidisha in low-income countries. In just a year and a half, Zidisha has financed 102 small businesses with $65,645 worth in loans. Zidisha’s community of 277 lenders spans thirty countries, six continents and is only growing. High lender and borrower demand has spurred Zidisha to expand from Senegal and Kenya to Indonesia and Burkina Faso. Knowing Zidisha has the member demand to open in two new countries is a huge indicator of its success and Zidisha hopes that it can be available to any ambitious entrepreneur regardless of geographic location who lacks access to credit in the coming years. Zidisha also marks its progress by the flow of communication between borrowers and lenders. Currently an average of 10% of Zidisha borrowers post comments to their lenders every week. As internet access becomes more available worldwide, Zidisha has seen a growth in their active Facebook and Twitter followers. Zidisha is also capturing other social media to broadcast Zidisha. Client Relationship Managers keep blogs to document their experience and upload interviews of borrowers on YouTube. Furthermore, photo albums on Flickr and a monthly newsletter sent to all lenders keep Zidisha members in the loop. Zidisha has been closely listening to lender feedback as well, and has been fine-tuning its model in response to lender advice.

How many people have been impacted by your project?

101-1,000

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

Zidisha has high hopes for the future including expanding into more low-income countries, and strengthening communication between lenders and borrowers. If Zidisha continues at least at its current pace, it can expect to give entrepreneurs access to credit in six more countries in the next three years. To encourage the use of internet, Zidisha envisages holding computer classes. Furthermore, Zidisha is nurturing its lender and borrower communities to become more interactive, and hopes that throughout the next three years, members will exchange ideas and communicate frequently. Zidisha also anticipates reaching out to schools and universities to strengthen its base of lenders.

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

It is clear that certain barriers might hinder the success of Zidisha. If borrower’s business fails and he or she is unable to pay back their loan, Zidisha’s credibility could be jeopardized. Business failure is an obvious risk among any start-up businesses, especially in developing countries. Zidisha borrowers have run into specific trouble such as major surgery, which has disabled a borrower from working, and theft of all capital. To overcome this obvious issue, Zidisha clarifies to all lenders that lending money to entrepreneurs is a risk. However Zidisha has also gone a step further and has taken a unique approach to this issue by creating a function that enables lenders to forgive their share of the loan in the case of an extreme catastrophe. Zidisha has also found that while the number of computer-literate entrepreneurs is rapidly growing, many entrepreneurs, especially in Senegal, still do not have a firm grasp on the internet, thus, an intern on the ground is extremely beneficial in ensuring that operations run smoothly. As Zidisha is a newly formed non-profit, finding an intern for all seasons has proven to be difficult, and applications are posted at a slower rate when an intern is not in country. Since a Zidisha internship is an excellent opportunity that challenges students and introduces them to a vastly different culture, Zidisha plans to overcome this issue by advertizing the internship more broadly and, if funds become available, providing a stipend for the currently unpaid position. Zidisha expects to tackle any obstacles with a creative approach.

Tell us about your partnerships

Zidisha prides itself on the fact that it operates at extremely low-costs and without intermediaries, however Zidisha does use local microfinance institutions and banks to verify borrowers credit histories. With that said, Zidisha has connections to SEM Fund a local microfinance institution in Dakar, Senegal and is partners with local microfinance organizations in Nakuru, Rift Valley, Kenya and Badung, Bali, Indonesia.

Explain your selections

Zidisha puts a mandatory interest rate of 5% on every loan in order to cover transaction costs and costs for background credit verification. First-time borrowers must also pay a fee of $20 for their first loan. After their first loan, however, they have no fee. Zidisha is a 501 (c)3 non-profit, and accepts donations from customers. Zidisha borrowers and lenders have the option to give money to help support Zidisha.

How do you plan to strengthen your project in the next three years?

Zidisha plans to strengthen its project by expanding into new low-income countries that have limited access to credit. If Zidisha continues at its current rate, it can expect to open in two new countries per year. Through connecting with local microfinance institutions in developing nations and becoming familiarized with the culture there, Zidisha will set up its foundations. As well as branching out into new countries, Zidisha hopes to become more widespread within the countries that it is already active in. Zidisha also hopes to increase its member base. It is currently undergoing a web-site makeover to make its web site more user friendly, accessible and interactive. Furthermore, Zidisha hopes to expand its lender base by reaching out for support among to schools and other organizations. Zidisha expects to respond to lender feedback in order to fine-tune its model. With new technology coming out constantly, Zidisha hopes to harness new technology for its benefit. Most seriously, Zidisha is interested in utilizing mobile banking for its clients, allowing entrepreneurs even in the most remote areas access to credit through Zidisha. Zidisha currently uses M-PESO mobile banking in Kenya and hopes to increase the use of this system.

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Lack of visibility and investment

SECONDARY

Restricted access to new markets

TERTIARY

Underemployment

Please describe how your innovation specifically tackles the barriers listed above.

Zidisha tackles the lack of visibility and investment by providing a source of credit to those who need it but have no access to it. Through its peer-to-peer micro-lending model, Zidisha ensures that those who are ambitious and have perfect records or re-paying loans can have access to credit and investment. By providing this credit, Zidisha enables those who would not have had access to new markets otherwise because of high cost of entry the ability to venture into new markets and start businesses. Therefore, Zidisha is able to tackle the problem of underemployment in many developing nations by providing credit to entrepreneurs so they can employ themselves and hire employees, changing their life as well as others in the community.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

Grown geographic reach: Global

SECONDARY

Leveraged technology

TERTIARY

Please describe which of your growth activities are current or planned for the immediate future.

Zidisha is currently expanding into more countries now, specifically Indonesia and Burkina Faso; however, it hopes to become globally accessible in the future, allowing any entrepreneur access to its peer-to-peer lending platform. Zidisha also hopes to leverage technology for its advantage as new technology becomes available. Zidisha currently uses mobile banking in Kenya and hopes to spread this practice in Senegal and its other active countries as well. Unfortunately, these systems in Senegal are not efficient enough yet for Zidisha’s use. Zidisha is also capitalizing on social media to grow its lender base and hopes to expand this use with more in-depth videos of borrowers and a more accessible web site

Do you collaborate with any of the following: (Check all that apply)

NGOs/Nonprofits, For profit companies.

If yes, how have these collaborations helped your innovation to succeed?

Zidisha’s collaborators are local microfinance institutions in each country. It is through these institutions that Zidisha is able to perform background checks on borrowers transactions. Furthermore, local institutions are a great way for Zidisha to publicize itself to the local community. Local institutions suggest borrowers to Zidisha and vice versa. Through this relationship, Zidisha is able to maintain a strong base of borrowers.