Why Zidisha?

From an interview with Zidisha director Julia Kurnia:

"Zidisha is the world’s only direct person-to-person lending service to cross the international wealth divide. That said, our philosophy of putting more responsibility in the hands of borrowers in return for lower fees is applicable to the microfinance industry as a whole.

Traditional microfinance institutions have often operated on the assumption that low-income entrepreneurs in developing countries need a lot of hand holding: required meetings and training, loan officers visiting in person to collect repayments, etc. So they build expensive bureaucracies to administer the loans, with the result that the world’s poorest people pay the world’s highest interest rates for their loans: 35 to 40 percent is the global average for microfinance loans.

At Zidisha, we’ve proven that a different way is possible, and that low-income individuals in developing countries can repay direct person-to-person loans just as responsibly as people everywhere, without the bureaucracy and the hand-holding. This is a real paradigm shift for the microfinance industry. Already, one of India’s largest microfinance institutions is piloting a new lending model inspired by Zidisha, in which clients are entrusted to deposit loan repayments on their own in return for lower interest rates.

Why is microlending an important part of starting up a business, especially in the poorest parts of the world? 
It is exceedingly difficult for households in the poorest parts of the world to save the lump sums needed to take their businesses to the next level. In developing countries, customers typically pay on credit, in tiny amounts, and these trickles of income are used first for family consumption needs. Microlending provides the larger capital amounts needed to purchase assets — a high-yielding dairy cow, a sewing machine, bulk purchase of materials — that result in full-time employment and dramatically increased incomes.

Our lenders represent 62 countries on every continent of the world. They typically choose to lend with Zidisha because the borrowers who receive their funds are not being charged high interest rates, and they like the transparency and opportunity to dialogue with a remarkable entrepreneur on the other side of the world — and give them a chance at a new life with a small loan."

http://www.one.org/us/2012/06/26/zidisha-fostering-entrepreneurship-one-loan-at-a-time/