By Julia Kurnia
Note: this article is authored by the founder of Zidisha. The information about Kiva Zip is taken from public sources, and does not necessarily express the views of Kiva or Kiva Zip.
Zidisha and Kiva Zip are both experimental web platforms that aim to use person-to-person lending approaches to reduce the cost of microloans in developing countries. How are they different?
In general, Zidisha has a more radically transparent, hands-off and libertarian orientation. This can be a good thing or a bad thing, depending on the sort of experience you are looking for. Zidisha is structured as a free marketplace, where lenders and borrowers interact directly without local partners. Lending through Zidisha is a do-it-yourself experience that involves exploration and direct human connection, like discovering remarkable artwork at Etsy.
In the case of loans outside the US, where Kiva Zip is most frequently compared with Zidisha, Kiva Zip feels more like a traditional managed charity. Kiva Zip loans are overseen by local partners called Trustees, and the Trustees have an especially active role in non-US loans. The result is a more polished and uniform experience, but one where the direct connection and unique voice of the overseas borrower are often lost.
I consider these to be the most important differences between our lending models:
Geographic scope. Zidisha offers loans in Benin, Burkina Faso, Ghana, Guinea, Indonesia, Kenya, Niger, Senegal and Zambia, and we have no plans to enter the US market. Kiva Zip offers loans in the US and Kenya.
Interest rates. Zidisha allows borrowers to offer interest rates of their own choosing to lenders. Lenders may then choose to fund the loans at any rate they desire, from 0% up to the maximum offered by the borrower. The rate of interest chosen by Zidisha users varies widely, but the average is about 5%. Zidisha borrowers also pay a 5% service fee per year the loan is held to cover money transfer costs. Zidisha is not supported by any large donors, and borrower fees along with optional lender tips fully cover our operating costs.
Kiva Zip is interest-free. Its operating costs are subsidized by large outside donors, so that borrowers are not asked to pay any service fees to Kiva Zip.
Read the full article at the Huffington Post.
