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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 the first peer-to-peer microlending service to link borrowers and lenders without intermediaries.  The organization is named after the Swahili word zidisha (pronounced [zi.ɗi.ʃɑ]), which means "grow" or "expand".
The Zidisha website facilitates microlending transactions between individual web users worldwide and computer-literate, low-income entrepreneurs in developing countries. Users can fund loans, which borrowers use to develop businesses that improve their families' incomes. Borrowers can share business updates and communicate with lenders as they repay loans.
Zidisha was founded in October 2009 by Julia Kurnia. Julia Kurnia was previous co-founder of www.sem-fund.org. SEM http://www.kiva.org/partners/4 was a partner of Kiva, but had huge delinquency rate under her leadership since late 2009, and SEM had to close its relationship with Kiva in March 2012.
At the time of its founding, Zidisha was still an unproven experiment, piloting a concept that had never before been tested: that small-scale entrepreneurs in developing countries are capable of interacting responsibly with peer-to-peer lenders via a self-regulating web platform, without needing local intermediaries to communicate and manage loan transactions on their behalf.
Though there are other microlending websites that allow individuals to contribute funds toward microloans of their choice, all of them rely on local microfinance organizations to communicate with lenders, create loan applications and collect repayments. In these intermediated microlending platforms, the communication is all one way, so that the borrower is often unaware of the lenders who funded his or her loan. The average intermediary organization adds over 30% - sometimes as much as 100% - in fees and interest to loans raised through these websites to cover its own administrative expenses. Such high interest rates reduce borrowers' profits, sometimes to the point of making them poorer than they were before they received the loan.
Unlike the postings on other microlending platforms, the loan applications and comments posted on Zidisha's loan pages are written by the borrowers themselves . This opens the way for dialogue between lenders and borrowers, so that lenders can receive answers to their inquiries about the loan and business directly from the entrepreneur they are funding. Eliminating unnecessary intermediaries also decreases cost of the loans.
Zidisha's lending process works as follows:
1. A first-time loan applicant creates a profile that describes his or her business and personal details.
2. The applicant's details are independently checked by Zidisha or a Zidisha partner.
3. The applicant then posts a loan request that describes the proposed investment, desired loan amount and repayment period, and the maximum interest rate the applicant will accept.
4. Zidisha’s lender participants then have the opportunity to bid to finance all or a portion of the loan at a proposed interest rate that is equal to or less than the applicant's desired rate, net of a transaction fee equal to 5% of the original amount of the loan for each year the loan is outstanding. If the loan is oversubscribed, then bids from lenders with the lowest proposed interest rates are retained.
5. 100% of lenders' accepted bids are disbursed to the borrower. Loan values are fixed in local currency, using the exchange rate effective at the time the loan is disbursed. Because loan values are fixed in local currency, lenders bear the risk of any currency exchange rate fluctuations.
6. The borrower repays principal and interest according to the schedule proposed in the loan application. Each time the borrower makes a repayment installment, lenders' shares of principal repayment and interest are credited to their accounts on the Zidisha website. Lenders may request to reduce their funded balance and receive a corresponding cash promotional payment at any time, or use it to finance new Zidisha loans.
7. Throughout the loan application and repayment period, lenders may post comments and questions, and borrowers may supply additional information and business updates through a weblog on their profile pages.
8. Lenders may post feedback on all lending transactions with which they are involved, thus creating a performance record that allows borrowers to request progressively larger loans with each successful repayment. 
Zidisha facilitates direct communication between its members, such that lenders not only receive direct reports from the borrowers on the impact of their loans, but also gain the chance to experience life through the eyes of an ordinary person in a low-income community on the other side of the world. Zidisha members often find that they have much in common. For example, a lender who is a dairy farmer in Wisconsin may discuss cattle rearing with a dairy farmer in a small village in Kenya's Rift Valley Mountains. 
Typically, peer-to-peer microlenders offering interest on loans are regulated by the Securities and Exchange Commission. In 2008, the SEC required that peer-to-peer lending companies offering interest on loans to register their offerings as securities, pursuant to the Securities Act of 1933.   Accordingly, Prosper was shut down by the SEC on November 24, 2008, and didn't reopen until July of 2009, after it had registered with the SEC.  Lending Club announced its completion of the SEC registration process on October 14, 2008.  MYC4, a microlending marketplace focused on African entrepreneurs, similarly announced in 2010 that they are "not allowed to disburse money to North American Investors" because of SEC regulations. 
The tax treatment of these promotional gifts is unclear. Gifts are taxed in the United States, which would mean that for US lenders, the original loan principal as well as any interest income would be subject to taxation. Zidisha states in its terms that, "It is the responsibility of website users to report and pay any applicable taxes on any cash payouts received from Zidisha." 
Zidisha does not enable tracking of financial returns of their loans on the website. According to their FAQ, this is because, "We are not intended as a financial investment platform, and are not licensed to market loans as financial securities. We do not display tracking of financial returns in order to avoid giving the impression that our service is a good place to store financial assets or to make for-profit investments, and in order to ensure that we are in compliance with United States regulations governing the marketing of financial securities." 
The average Zidisha borrower pays a 10.21% flat rate in annual interest, including both interest paid out to lenders and a 5% transaction fee.  This is below the rate of inflation in many developing countries. This means that a lender in average will lose money lending through Zidisha 
According to an analysis published by microfinance risk consultant Daniel Rozas in July 2011, Zidisha offers loans at less than half the interest rates of traditional microfinance institutions as estimated by MFTransparency. 
As of August, 2012, Zidisha's repayment rate was 98%.  By March 7, 2014, Zidisha's repayment rate had fallen significantly, with 77.2% of loans having been repaid by the time their final repayment installment due date had passed. Zidisha's statistics also show that only 40.9% of active loans are repaying on time, with an additional 15% of active loans repaying on time after being rescheduled.  The remaining 44.2% of loans in various states of delinquency. 
|Category||Principal Outstanding (USD)||Percentage of Total|
|Paying back on time||$349,277||40.91%|
|Paying back 31 - 90 days late||$38,115||4.46%|
|Paying back 91 - 180 days late||$42,181||4.94%|
|Paying back over 180 days late||$87,834||10.29%|
|Paying back on time (rescheduled)||$127,497||14.94%|
|Paying back 31 - 90 days late (rescheduled)||$50,119||5.87%|
|Paying back 91 - 180 days late (rescheduled)||$87,132||10.21%|
|Paying back over 180 days late (rescheduled)||$71,514||8.38%|
Of the loans whose repayment due dates have passed, 77.2% have been repaid to lenders, 12% are being repaid late, 1.4% have been forgiven by lenders and 9.5% have been written off. 
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