First, an important warning: Zidisha is not a financial institution or an investment service. This means that this is not a safe place to store your savings or financial assets. So we suggest that you treat lending through Zidisha as a philanthropic activity — and as always, don’t lend out any funds that you cannot afford to lose.
We make lending easy, but we don’t take it lightly — so we take a variety of measures to strengthen the security of our lending platform and put confidence behind your compassion.
First, we verify the identity of our entrepreneurs by:
- Collecting their precise residential addresses, telephone numbers, and national identity numbers before allowing them to post a loan application.
- Requiring applicants in most countries to verify their online identity by linking an active personal Facebook account to their Zidisha account.
- Disbursing loans through banks and payment services that check government-issued identity cards to verify recipients' identity.
- Requiring entrepreneurs to provide telephone numbers of several local contacts that can vouch for their identity and reputation.
- Using data science to screen entrepreneur accounts for suspicious activity before activating new entrepreneurs and disbursing loans.
- Inviting local volunteers to provide a second screening of new applicants when available.
Then we help incentivize timely and responsible repayments by:
- Limiting loan sizes to small amounts for new entrepreneurs and increasing those limits only if they maintain high on-time repayment rates over time.
- Linking entrepreneurs' credit limits to the repayment performance of other entrepreneurs they referred to Zidisha.
- Displaying entrepreneurs' historical on-time repayment rates — and those of the entrepreneurs who invited them to join Zidisha, if applicable — so prospective lenders can evaluate their repayment track records.
- Displaying comments and feedback ratings left by previous lenders on entrepreneurs' loan profile pages.
- Notifying and requesting mediation from local contacts, volunteers, and leaders in the entrepreneur's community in the event of default.
That said, it's important to understand that Zidisha is a purely online service without local offices or loan officers. We are a low-cost nonprofit community (managed by volunteers). Our organization is responsible only for maintaining the Zidisha.org website as a platform for the transactions that take place between its members, and it is up to the lenders, not Zidisha, to determine if a business is viable and worthy of being funded.
We do not undertake many of the activities that are performed by traditional banks and microfinance institutions, including:
- Fact-checking or guarantees that the information provided by entrepreneurs is accurate.
- Physical visits to entrepreneurs. Local volunteers may optionally visit entrepreneurs, but this is not guaranteed or required.
- Verification and reporting to lenders of how loan funds have been spent.
- Repayment enforcement, guarantees or providing reports of collection efforts to lenders.