Zidisha is the world’s first direct peer-to-peer lending service to bridge the international wealth divide, enabling individuals worldwide to lend to and communicate with borrowers in developing countries without local intermediaries. Pulse 2.0 interviewed Zidisha founder and director Julia Kurnia to learn more about the service.
Julia Kurnia’s Background
Kurnia has always felt that global poverty was a defining ethical challenge of our times and wanted to do something about it. Kurnia said:
“In graduate school, I studied economics and international affairs with the intent of having a career at the UN or an international development organization. As I learned more about the field, I became fascinated by the potential of technology to level the playing field for motivated people in the world’s least developed countries. I was especially interested in microcredit, small loans that help low-income people start small businesses to increase their earning power.”
“While in graduate school, I spent some time in Senegal working with a field partner of Kiva, a nonprofit that allows local organizations in developing countries to raise funds for microloans by posting profiles of the funds’ recipients on Kiva’s crowdfunding website. I experienced first-hand the power of technology to help donors feel a connection with individuals half a world away. At the same time, the cost of managing the loans and connecting the fund recipients (mostly women in rural villages) to Kiva’s platform was very high relative to the loan amounts. We weren’t able to build a financially sustainable organization without charging excessive fees or interest for the loans. This was in 2006 before internet connectivity became widely available in developing countries.”
Formation Of Zidisha
How did the idea for Zidisha come together? Kurnia shared:
“I went on to work at a US government agency that funds mid-size businesses in sub-Saharan Africa for several years. During that time, internet access on the continent improved, and low-cost cybercafes began to enable ordinary people to go online. Facebook was especially popular with teenagers and young adults. I thought that this internet-savvy younger generation was capable of using Kiva to connect with lenders directly without needing a local intermediary organization to post profiles on their behalf. Direct peer-to-peer lending platforms were already operating within the US and Europe, and I wondered if such a platform could enable direct peer-to-peer lending connections between lenders in developed countries and borrowers in developing countries.”
“The main obstacle to putting this idea into practice was the high cost of direct person-to-person money transfers. Eventually, the spread of mobile phone payment platforms, especially Kenya’s Mpesa, solved this problem and made a direct peer-to-peer lending platform technically feasible. I started Zidisha.org in Kenya in 2009 to test the concept. It was the first direct person-to-person lending platform to connect borrowers and lenders directly across the international wealth divide without intermediary banks. The use of a web platform and mobile payments allowed us to reach especially remote entrepreneurs at low cost: our first loans went to a Masai settlement that lacked electricity, paved roads, or any bank branches.”
Favorite Memory
What has been your favorite memory working for Zidisha so far? Kurnia reflected:
“My favorite memories are those of the entrepreneurs, who must often overcome almost insurmountable obstacles in a quest to improve their lives and provide opportunities for their children.”
“There’s Wairimu in Kenya, who was a top student who dreamed of going to law school but was instead given a sack of corn to sell each day in the marketplace. She used Zidisha loans to grow her grain distribution business until it could fund her tuition, and now she is in graduate school studying for her bar exams.”
“There’s Siaka in Burkina Faso, a maverick entrepreneur who used Zidisha funds to start a cassava-processing facility that created jobs and transformed the economic life of his rural village. And Mardiana in Indonesia, who devised a new type of oyster mushroom cultivation in her region of Sulawesi, creating a new source of income for all the women in her region.”
“One of the most inspirational stories is that of Sammy in Kenya, whose Zidisha-funded dairy cow provided daily cash income for his family and even made it possible for him to pursue a long-deferred dream of going back to school. But when a friend was injured and in critical condition, he sold the cow to fund life-saving medical care. When we shared the story with the Zidisha community, they came together and, in a few days, raised enough money for him to buy a new cow.”
Core Products
What are Zidisha’s core products and features? Kurnia explained:
“We provide a philanthropic crowdfunding platform where donors can fund vetted entrepreneurs in developing countries and interact with them directly, without intermediaries. All profiles are written by the entrepreneurs themselves, and backers receive thank-you messages and updates directly from the entrepreneurs.”
“At the end of each project, instead of repaying the original donor, the entrepreneur is invited to “pay it forward” by in turn, funding another entrepreneur on the platform. The donors receive reports of the new projects enabled with the paid-forward funds and can watch their impact grow over time with a ripple effect as funds are paid forward with each iteration. In this way, a small amount “invested” in Zidisha projects ultimately enables many times its initial value in life-changing projects.”
Evolution Of Zidisha
How has the Zidisha evolved since launching? Kurnia noted:
“In the beginning, we operated much like a traditional microcredit organization, using manual processes to verify applicants’ documents and vet profiles. Now we are more of a technology company. We use data science to prevent fraud and can automatically analyze mobile money statements to check cash flow and verify identity.”
“We originally credited repaid project funds back to the original donors, who would then need to log on and reallocate the repayments to a new project. Most of them were too busy to do so and instead chose to have our algorithms allocate the funds to new projects automatically. Finally, we decided to allow the entrepreneurs themselves to choose recipients of the repaid funds, and our current Pay It Forward program was born. It has the same transparency, sustainability and high impact of our traditional microloan program, but now the entrepreneurs have more agency in the process.”
Differentiation From The Competition
What differentiates Zidisha from its competition? Kurnia affirmed:
“There are many charitable websites that raise money for microloans or other causes using personal stories, but all of them, to my knowledge, have an organization or other intermediary that interacts with the donor on the recipient’s behalf. This produces a more professional-looking fundraising story but undermines transparency and adds a layer of cost that reduces the amounts that can be passed on to the recipient.”
“Zidisha enables a direct connection and dialog with recipients that is unique in the world of philanthropy. Since there is no intermediary, the model is more efficient which translates into more funds going to the end recipients.”
Challenges Faced
Have you faced any specific bottlenecks in your sector of work recently? Kurnia acknowledged:
“We have enormous demand on the part of the entrepreneurs, and the main bottleneck is funds. We turn most applicants away because we lack the resources to enable them all to fundraise on the platform.”
“Regulatory conditions in the countries where we operate can also create obstacles. Sometimes, we will have a thriving program in a given country. Then, the country will pass new crowdfunding regulations that raise compliance costs, sometimes making it infeasible to continue to operate there. Often, new regulations are aimed at preventing abuses in equity crowdfunding, but they don’t adequately differentiate between this and donation-based models like ours.”
Significant Milestones
What have been some of the company’s most significant milestones? Kurnia cited:
“Since our founding in 2009, we’ve raised over $20 million in crowdfunded capital for about 300,000 small businesses in developing countries. What is equally exciting to me is that we’ve built a community that directly connects people at a human level across vast geographical, cultural, and socioeconomic barriers, something that is really unique among online platforms. At Zidisha, entrepreneurs and their backers exchange messages, photos, and videos and really become a part of each other’s lives.”
Future Company Goals
What are some of the company’s future company goals? Kurnia concluded:
“’Zidisha’ is Swahili for growth, as in a business, investment, or quality like prosperity. We’d love to see Zidisha continue to grow until we’re able to connect all deserving entrepreneurs in disadvantaged locations with the resources they need to achieve their goals.”
