There’s a new(ish) mircrofinance website out there these days, called Zidisha. It’s similar to Kiva, but a key difference is that Zidisha is the first to have no intermediaries between borrowers and lenders. This way, the borrowers receives the funds directly and does not deal with a local MFI (microfinance institution). By doing this, Zidisha has gotten rid of the overhead associated with MFIs (loan officers, buildings, etc) and can offer low interest rates. Typical rates are about 8% compared to the global average of 35%.
For lenders, the idea isn’t really to make money (though you certainly can), but instead to have a philanthropic bent to simply make capital available to motivated borrowers, and then be paid back. Borrowers propose interest rates and lenders can choose agree to the same rate or propose a different rate (even 0%), though there is a service charge of 5% and one-time sign-up fee for borrowers. Zidisha is quick to point out that it won’t be like US banks during the housing bubble who simply originated loan after loan to shaky borrowers, as the fees are:
…used to cover operating expenses only… This is deducted from borrower repayments, rather than from loan disbursements. Linking fee income to repayments means that Zidisha’s financial interest is in facilitating the financing of quality loans to small business entrepreneurs who are capable of repayment, not in maximizing lending volume at the expense of quality.
Just last week Zidisha has added their first borrower in Burkina Faso, a man starting up a restaurant near the entrance to the waterfalls I visited in the south-west a few months back. My good friend James, another PCV, is working closely with him and is actually acting as a guarantor in this situation because it is the first loan in-country.
I encourage you to take a look at the site, sign up, and make a loan. Even a small loan can go a long way here, and the current repayment rate is 100%. Plus, if you loan to the Burkinabé borrower I mentioned, there’s an incredibly capable PCV working alongside him. I just signed up myself and made a small loan at a 3% interest rate (he’s currently 70% funded for his $1,128 loan —July 21st update: the loan is now 100% funded). For more information, check out the Zidisha FAQ.