Financial sustainability at Zidisha

Discussion in 'Zidisha | Fostering Peer2Peer Entrepreneurship' started by Julia Kurnia, Jun 19, 2014.  |  Print Topic

  1. Julia Kurnia

    Julia Kurnia Silver Member

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    Dear all,

    I'd like to share this overview of trends in financial sustainability at Zidisha: https://www.zidisha.org/forum/threads/trends-in-financial-sustainability-of-zidisha-loans.1034/

    I understand that many of you experienced much higher than expected write-off rates for loans made through Zidisha. I'd like to do my best to explain why.

    Historical repayment rates necessarily include only data on loans that have ended. At Zidisha in early 2013, most ended loans had been issued far earlier, in early 2012 or before. Our loan volume in early 2012 was so small that we were able to closely supervise each individual loan. Thanks to this close individual supervision, the repayment rate for loans issued in our earliest days remained above 98%.

    During the second half of 2012, we experienced a growth surge. Thousands of loans began to be funded, and we lost the ability to interact personally with each borrower. For this reason, the write-off rate for loans issued in late 2012 and early 2013 ended up being unexpectedly higher than for earlier loans.

    By spring 2013 it had become clear that credit risk had increased, and we made a series of changes to improve credit risk at the higher volumes at which we were now lending. The changes we made, and the resulting improvement in on-time repayment rates, are described in the article linked above.

    I understand if those of you who experienced high write-off rates opt not to return to Zidisha. At the same time, I think a case can be made for giving our platform a second chance, perhaps by lending a dollar each to a few different entrepreneurs at an interest rate you consider fair. If the loans perform to your satisfaction, you may then consider continuing to lend through Zidisha.

    Either way, I'd be happy to respond to questions and comments here.
     
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  2. IDGflygirl
    Original Member

    IDGflygirl Gold Member

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    Just to understand, for any loans that were 'written off' (originated in 2013) -- there is no obligation for the borrowers to pay back those loans and they are banned from posting new loans? What happened to the mentors of these borrowers -- did they no longer have the responsibility to follow up with their mentees?
     
  3. quma

    quma Active Member

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    I would be also interested in an answer to your question @IDGflygirl ! and I am checking regularly this thread to see if @Julia Kurnia decides to answer.
    Apparently this is not the case...

    In my observation, defaulted borrowers 'lose' their VMs thus there is no one that follows up on them to see if the funds (or part thereof) can be recovered. And this not only for loans that originated in 2013, but also for those that originated in 2014 - and I guess that this will happen soon also for those that originated in 2015, as we have now July so some are being 'written off' already.

    Thus, quite to the contrary to what Zidisha states that "writing off a loan is a reporting convention, and does not necessarily mean collection efforts stop or that it will not be repaid to lenders", collection efforts do indeed stop once the loan is written off. Because if these borrowers do not even have a VM , who is going to follow up on them and continue the collection efforts? Zidisha not for sure as we all know...
     
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  4. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    I wouldn't hold my breath in expectation of an answer from Julia. She hasn't been here since January.

    You could ask on the Zidisha forum, but that might just result in your inconvenient question getting "moderated."

    Hope you don't have too much invested in Zidisha loans.
     
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  5. quma

    quma Active Member

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    nope I'm not holding my breath...

    I'm not holding my breath in expectation of collection efforts either -- and this not only as regard to defaulted (aka 'written off') loans.

    I had some time and curiosity to kill today, so I followed a recent new-member 'history' .. that is, I followed back the string of invites that brought this new member (paying back late) to Zidisha. This is what I found:

    Original member (not invited by anyone), loan disbursed on Mar 23, 2014, defaulted, no VM: https://www.zidisha.org/loan/new-stock-of-enegy-saving-eletricals-bulbs
    Last payment on Sep 6, 2014, defaulted
    5 invites: 3 paying late and 2 defaulted

    One of his invites (paying back late) is this one, loan disbursed on Apr 16, 2014, no VM: https://www.zidisha.org/loan/new-stock-of-ladies-skirts-and-tops
    Last payment on Jul 4, 2015 (after an incredible amount of reschedules and skipped repayments), paying back late
    2 invites: 1 on-time, 1 late

    The invitee paying back late is this one, loan disbursed on Jan 23, 2015, no VM: https://www.zidisha.org/loan/buy-second-hands-ladies-shoes-and-children-shoes-to-sell
    Last payment on Jun 7, 2015, paying back late, but truthfully she is among the best of the bunch
    2 invites, both paying back late

    One of her late invitees is this one, loan disbursed on Jul 7, 2014, no VM: https://www.zidisha.org/loan/to-buy-eggs-and-crates
    Last payment in May 27, 2015 (after an incredible amount of reschedules and skipped repayments), paying back late
    1 invite: paying back late

    The invitee is this one, loan disbursed Jan 9, 2015, no VM: https://www.zidisha.org/loan/inventory-of-pudding-dishesforks-glasses-and-cooler
    Last (and only) payment on Mar 31, 2015 (for a payment due in January!), paying back late
    8 invites: 6 paying back late, 2 defaulted

    One of the late invitees is this one, loan disbursed Mar 11, 2015, has a VM (!): https://www.zidisha.org/loan/build-structuresbuy-feeds-and-medicine-for-poultry-business
    Last (an only) payment on Mar 12, 2015, paying back late
    10 invites: *all* paying back late

    One of the late invitees is this one, loan disbursed Feb 9, 2015, no VM: https://www.zidisha.org/loan/inventory-of-photocopying-materials-as-colleges-have-opened
    Last repayment in Mar 16, 2015, paying back late
    2 invites: both paying back late

    One of the invitees is this one, loan disbursed Apr 15, 2015, no VM: https://www.zidisha.org/loan/inventory-of-food-stuff-and-buy-plates-for-my-food-kiosk
    Last repayment on Jul 1, 2015, paying back late, but truthfully he is among the best of the bunch
    7 invites: 5 paying back late, 2 expired

    One of the late invitees is this one, loan disbursed May 9, 2015, no VM: https://www.zidisha.org/loan/purchase-25-crates-of-eggs-for-sale
    Last (and only) payment in May 10, 2015, paying back late
    4 invites: 3 paying back late, 1 expired

    One of the late ones is this borrower [the one I decided to trace back], loan disbursed June 13, 2015, has a VM (!): https://www.zidisha.org/loan/buy-tireshelmet-and-reflective-jacket-for-motorbike-busines
    Thankfully no invites!

    Thus following only the invite history (backwards) of one member I count: 5 defaulted loans, 33 borrowers paying back late, 1 (only one!) borrower paying back on-time, and in total only 2 borrowers with a VM!
     
    Last edited: Jul 13, 2015
  6. marcwint55

    marcwint55 Gold Member

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    Zidisha is a complete joke. They are not the least bit trustworthy.
     
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  7. quma

    quma Active Member

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    while I'm here let me update my earlier post:

    Six months after my original post I count: 34 defaulted loans, 4 borrowers paying back late, 1 (only one!) borrower paying back on-time.
    Among the defaulted loans is also the new-member I decided to follow, whose loan was disbursed in June 2015. Anyone surprised?
     
    Last edited: Jan 12, 2016
  8. KyRoamer
    Original Member

    KyRoamer Gold Member

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    Zidisha has been bad news for me. Riddled with borrower fraud. Management (Julia) seems totally inept. My advice is to avoid it.

    If you want to make charitable contributions to provide aid in underdeveloped countries do so. Done properly it will be tax deductible.

    I was big on KIVA and still active rolling an investment of about $2,100. However, looking at cost to borrowers and the lack of response from the MFI's when loans went bad soured me on KIVA.

    I am a believer in KIVA ZIP even though it has more risk based on historic loan losses than KIVA. With ZIP I have been able to fund local borrowers in Kentucky and southern Indiana mostly. I've had a could go bad but I'm okay with it.

    Good luck to everyone. Avoid Zidisha. Consider giving to charity. Try KIVA ZIP. Happy New Year.
     
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