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.