Zidisha is a 501(c)(3) non-profit organization that allows people to lend small amounts of money directly to entrepreneurs in developing countries. It is a peer to peer micro-lending service that links borrowers and lenders worldwide without the inter mediation of a local micro-finance institution. The organization is named after the Kiswahili word zidisha which means “grow” or “expand”.
The Zidisha website facilitates micro-lending transactions between individual web users worldwide and low-income entrepreneurs in developing countries. Users can fund loans, which borrowers use to develop their businesses. Borrowers can share their funded business updates and communicate with lenders as they repay loans.
Borrowers write their own business proposal and upload a photo or connect via Facebook. They propose an interest rate and terms, and work it out with the lenders from there. The interest rate for Zidisha loans is between 5% and 20%, expressed as a flat percentage of the loan amount per year the loan is held. Zidisha allows borrowers to adjust their weekly repayment installment amounts up or down to accommodate changing financial circumstances. Those without bank accounts receive the loans via M-PESA.
Zidisha uses social-network verification as one of the necessary steps in approving applicants. Therefore, potential applicants must: Be active internet users and have their own Facebook account with extensive social connections; Have a business or source of income that will allow them to make repayments each week; Be able to secure endorsements from their family, neighbors or work associates, and the leader of an organization in their community.
If you have been invited to join by an existing member in good standing, you can borrow up to 8,785 KES for your first loan. If you do not have an invite from an existing member, you can borrow up to 4,393 KES for your first loan. After that, your credit limit will increase depending on your record of on-time repayments.
In addition, new applicants who succeed in raising a loan pay a one-time registration fee of 1,000 KES, which is deducted at the time the first loan is disbursed. If your loan is not funded, you are not charged any fees at all.