Spotlight on Theresia Kabiti, Kenya

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The laughter of children is the first sound I hear as I enter the grounds of Terrian Academy. A smile is brought to my face as I see a group of forty students singing songs and playing games with their teacher on the open field in front of their classroom. The walls of each class are decorated with brightly colored homemade posters and pictures, while the desks are filled with children deep in concentration as their teacher passionately provides instruction. After months of renovation, Terrian Academy is now in session!

Skeptics of microfinance claim there is no evidence of poverty alleviation beyond the anecdotal, and that although individual lives may benefit, impact on a larger scale is yet to be proven. Founder, principal, and teacher of Terrian Academy, Theresia Kabiti provides a sound argument to the contrary, for she has leveraged Zidisha loans to provide educational opportunities to an entire community in the slums of Nairobi, Kenya. The long-term effects of such access are immeasurable, as education is one of the most powerful tools for economic growth. Theresia Kabiti provides a learning environment for those with otherwise little means, offering lower costs and comparable teaching quality to that of private schools in Kenya. 

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Theresia used to enjoy a comfortable job as a well-paid teacher in a private school for privileged children. Every morning on her way to work, she would pass by less fortunate children in her own community who were not in school at all because their parents could not afford the fees. Most of these parents worked as laborers on daily wages of just a few dollars per day. Theresia decided to leave her job to start a school to facilitate education among the poor. 

While the other schools in the area charge over $20 per month, Terrian Academy charges just $6 per month, a cost accessible even to the most budget-constrained households.  In the beginning, Theresia had to go door to door to tell people about her school, and her first class had just five students. Soon, though, word spread among the parents in the neighborhood about the affordable new school.  Demand grew to the point where Theresia was forced to turn children away due to lack of classroom capacity.

I had first visited Theresia as her school was still being constructed. Due to heavy rains in Githunguri, the classrooms of the original Terrian Academy flooded and students were moved to a nearby abandoned building. With her first Zidisha loan of $996, she was able to renovate the school to avoid damage from future flooding, increasing the school’s enrollment to 80 students.

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The original Terrian Academy in 2012, before Zidisha lenders funded windows and doors

ImageTerrian Academy students at naptime, before a Zidisha loan funded paving of the classroom floors

Theresia used her second Zidisha loan to expand her school’s capacity further by adding three classrooms.  This allowed her to add classes up to third grade, and increase her student number to 120.  Her third and current loan was used to add windows and doors to the school, and to cement the floors of the classrooms.

Theresia’s youngest daughter is a student at Terrian school as well. When I asked her if her daughter gets any preferential treatment by being the principal’s daughter, she laughed and said no. The little girl wants to be an airplane pilot and Theresia hopes to be able, with the help of revenue earned from investments in the school’s growth that will be made possible through Zidisha loans, to afford the high aviation college fees.

To learn more, check out Theresia Kabiti’s Zidisha profile page.

ImageLetter written by a fourth grade student at Terrian Academy

This article is based on posts by Traci Yoshiyama and Achintya Rai, updated by Julia Kurnia.

Interest rates for lenders now capped at 5% flat / 10% APR

Today we reduced the maximum interest Zidisha borrowers may offer to lenders to no more than 5% flat, or approximately 10% APR.

This means that borrowers will now pay a maximum of 10% flat / 20% APR inclusive of a 5% flat service fee paid to Zidisha.  (This does not include a $12 lifetime membership fee, which is paid once when a borrower first joins Zidisha.)

Previously, we permitted borrowers to offer interest of up to 25% flat (approximately 50% APR).  (In practice, the higher rates were mostly offered for small short-term loans, resulting in total interest costs of only a few dollars.)  The intent was that allowing borrowers, especially newcomers who had not yet established a credit history or members who had low historical on-time repayment rates, to offer more interest to lenders would help loans that would otherwise go unfunded to attract financing.  The higher interest rates were also intended to allow lenders to recoup expected losses at a time when our loss rate was higher than it is today.

In practice, the higher interest rates do not seem to have resulted in higher levels of loan funding overall.  We believe the reason is that, while allowing higher interest improved the financial attraction of lending with Zidisha, it simultaneously weakened its humanitarian appeal.  The feedback we have been hearing from many of our lenders, supporters and the general public is that allowing such high interest rates undermined Zidisha’s unique value proposition: microlending at lower cost to borrowers than traditional microfinance organizations are able to offer sustainably.

In addition, credit risk at Zidisha has improved and become more predictable: the on-time repayment rate of first loan installments has roughly doubled over the past year.  As a result, we do not expect that interest rates of up to 25% flat / 50% APR are necessary to protect lenders from credit risk.

Finally, allowing high interest rates encouraged borrowers to differentiate themselves on the basis of financial returns alone.  We expect that reducing the maximum interest rate will strengthen the incentive for borrowers to instead differentiate themselves through memorable personal stories, good photos, frequent and meaningful dialogue with lenders and high on-time repayment rates.  This should improve the quality of the lending experience at Zidisha overall.

Our core mission is humanitarian, not profit-seeking.  There is no longer a strong reason to allow high interest rates to be offered at Zidisha, and the best way to stay true to that mission is to ensure that Zidisha remains a platform for philanthropy rather than financial profit.

Zidisha is the first direct P2P lending platform to bridge the international wealth divide.  To learn more, visit us at www.zidisha.org.

An Ageless Family Man

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By Lauren Rosenbaum and Julia Kurnia

Most people in Mugaa village call David Kamau “Baba Joshua” or “Wajoshua,” because in Kenya parents are known by the name of their first born child. Wajoshua has nine children, a number only slightly above average for a Kenyan family. As his parents’ oldest living son, he is responsible for taking on the family’s burdens, including caring for his parents as they grow old and raising his orphaned niece and nephew. He used to travel to his father’s house by foot, but when the old man’s health deteriorated Wajoshua moved his own house, carrying the roofing sheets and sticks that it had been made of to relocate his dwelling next to that of his parents.

In this area people live for a very long time, perhaps because they walk for miles and miles on hilly terrain daily and eat plenty of vegetables that they grow in their gardens. Wajoshua is 70, but he still seems as hardy and robust as a man in his thirties. His father died recently at the age of 118!

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David Kamau with his mother in early 2012

Wajoshua is employed as a gardener at the village school in Mugaa, Kenya.  He works hard to make sure that the school is running smoothly, which often requires heavy manual labor. The other day he was personally fixing one of the many atrocious roads that leads to the school, throwing heavy rocks out of the path and carrying bags of sand and gravel to replace them. I am continually amazed by how much energy he has to do these things.

I have been invited to Wajoshua’s house a number of times. The first time he showed me his goats and explained to me all of the measures he takes to care for them. He told me that the goats are better quality than typical African goats because they are able to produce milk and thus generate income without being used for meat. In order to obtain such animals, Wajoshua organized with a group of farmers to collectively breed the goats, rotating males and females among the group to avoid inbreeding. Wajoshua started with just one baby female, and then added a full-grown male and another baby male as well. To keep them healthy, he must pay for their food, salts, and medicine. He also feeds them fresh vegetables, like the kale he grows in his garden. Because the baby goat gets cold at night, Wajoshua brings him inside the house to sleep.

Wajoshua is a very social person and doesn’t think much of walking seven kilometers to see a friend. He also likes to invite people over to watch his television, which he powers with a solar battery – a common contraption in remote areas that do not have access to electricity. When I come to his house he always makes me mahindi choma (salty roasted maize), which is sort of like popcorn for Kenyan families. His kids watch the television with us, an exercise Wajoshua says helps them improve their English. After I leave they begin studying, using lamps powered by the solar battery. As the family values education, many of the children are at the top of their classes.

Wajoshua used his first Zidisha loan of $260 to purchase four more dairy goats, which he reared and one of them gave birth. He later sold them (save for the kid) and used the proceeds to buy a cow, whose milk is a source of daily cash for Wajoshua’s family. The cow recently gave birth and he now owns a calf.

With his second Zidisha loan of $469, Wajoshua bought a supply of maize and beans at harvest to resale during the lean season – improving food security and farmers’ incomes in Mugaa, while generating a net profit of $375.  He used that profit to purchase another heifer as an additional source of milk and income for his family.

Wajoshua invested his current loan of $943 in a larger supply of locally harvested beans.  He built a granary at his home to store the beans, and purchased a donkey to transport them from the farmers.  From there, he is selling the beans to to wholesalers from a nearby town.  He estimates that the $943 worth of beans will generate sales revenue of $1250, which he intends to use to purchase a stock of maize in time for that crop’s harvest season.

“The previous loans that have acquired from Zidisha have not only helped in improving our status as a family but have made my family an admiration in the society,” Wajoshua wrote. “Kudos to Zidisha team… Am very optimistic that all shall go well. Lucky me that Zidisha is my financial partner.”

You may read more in David Kamau’s loan profile page.

Spotlight on Rose Karanja, Kenya

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By Julia Kurnia

Several years ago, Rose Karanja’s reality was bleak. One of a small minority of girls in Kenya to complete high school, she renounced college ambitions to care for her orphaned brother and sister when the grandmother who had been supporting them passed away. Rose sold her schoolbooks and never looked back.

There was no work for a bright, articulate young woman in the neighborhood where Rose had grown up. Undeterred, she packed up her meager belongings and found a home for her new family in Ongata Rongai, a teeming slum just south of Nairobi with a burgeoning construction industry. There she joined hundreds of other destitute women who trudged back and forth under the hot sun, selling drinks and snacks to the workers who were breaking up rocks and laying bricks to build the homes of Kenya’s emerging middle class.

That’s when Rose decided to recreate her reality as she wished it to be. Faced with the impossibility of attending college, she turned the rows of dusty construction plots and concrete bricks into her lecture halls. She began to observe how the houses were built, how foundations were dug and concrete bricks aligned to create sturdy walls, how sheet metal was trimmed for roofs. She watched how the construction managers directed the process, producing blueprints, leasing equipment and negotiating with buyers.

The building industry was a male-dominated affair, and Rose’s initial forays into the more lucrative construction materials supply business were met with skepticism. Undeterred, she began marketing wheelbarrows of sand dug up from riverbeds. Later she progressed to hiring the unemployed men of her neighborhood to crush rocks into gravel, which she sold to her contacts in the construction sites. She used these small jobs as opportunities to network and establish trust among the construction managers.

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After five years of steadily building up her construction materials supply business, Rose had a lucky break. She secured a contract to build two houses from the ground up. In addition to sourcing materials, she would be responsible for hiring an engineer to design the homes and labor to build them, and overseeing the construction work. There was only one problem: nobody was willing to lend a woman with no track record of managing construction jobs the capital needed to get the project off the ground.

Rose had heard about Zidisha from her neighbors, and decided to give it a try. She paid fifty cents to access our website from a local cybercafe, and managed to raise the $359 needed to hire construction workers from individual web users in Belgium, Cambodia, Colorado, and Texas. Determined to prove her worth, Rose completed the two houses and repaid her loan in record time.

Her efforts to shatter gender stereotypes resonated with lenders worldwide, and her second round of Zidisha financing, for $1,050, was oversubscribed.  She used the funding to increase her workforce and purchase larger inventories of construction materials.  The profits generated by these investments were enough to purchase her own plot of land.

Today Rose is well known in Ongata Rongai, and construction managers nod respectfully as she passes by. She spends her time supervising workers, negotiating business deals, and saving for the day when she will return to school and earn a degree in Civil Engineering – which, she says, will better prepare her to achieve her ultimate dream of having her own construction company.

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You may view Rose’s story in her own words at her Zidisha loan profile page.

This is a revised version of an article originally published here.

Spotlight on Ndeye Bineta Sarr, Senegal

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Madame Sarr met me at the edge of the paved road, and even though it was the first time we met she greeted me as affectionately as an old friend. As we wound our way through the dusty dirt paths of her neighborhood, she introduced me to various local households that had benefited indirectly from her business: a cloth dealer in the nearby market, a little boutique stacked high with reels of yarn in every imaginable color, and a small sewing shop to which she sometimes outsources less specialized aspects of clothing manufacture. 

West Africa is famous for its vibrant traditional clothing, and many women in Dakar make a living from sewing traditional dresses. Yet in this competitive market, Madame Sarr has carved out a niche for herself thanks to sheer artistic genius. Her creations never fail to turn heads: multicolored skirts sparkling with embroidered stars, hand-knitted lace, and overlapping layers of transparent gauze, imposing folded headdresses with brightly dyed cloth tied in the shape of flowers, necklines in every imaginable geometric shape. Clients fortunate enough to own one of her outfits guard it for special occasions, and when they put it on appear to float above the rest of us in this world, suddenly immune to the billowing clouds of red dust and car exhaust that choke the air. If she had been born in another time and place, Madame Sarr could have easily handled the royal wardrobe of the court of Versailles.

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Madame Sarr’s house is constructed in the typical Dakar style: three brightly painted bedrooms alongside a small open courtyard, a separate shed for a kitchen and another for the restroom, corrugated metal roof, and a little faucet in the courtyard which provides the household’s only running water. The whole place was irreproachably clean and Madame Sarr’s artistic touch could be seen in the potted flowers and colored tiles decorating the courtyard.

The house seemed to be overflowing with children. A toddler was named after her, which is a great honor in Senegalese culture.  In all some thirty people – including Madame Sarr’s mother, siblings, nieces and nephews, and her own three children – live together in that house.

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Madame Sarr used capital raised from the first Zidisha loan to buy an electric sewing machine, rent a boutique workshop, hire an employee, and establish a working capital fund that allows her to fill up to a dozen client orders at a time (up from one or two at a time before her first loan). This allowed her to increase her income dramatically, making her the main breadwinner for her household and allowing the family to invest in public school education up to the university level for Madame Sarr’s children, nieces and nephews.

Madame Sarr suffered a setback two years ago when the building housing her workshop was demolished. She adapted by lending the electric sewing machine to her employee, who used it to assemble outfits that are cut and embroidered by hand by Madame Sarr in her home.  With subsequent loans, she purchased two more sewing machines, including an advanced model with she can produce more intricate designs.

Madame Sarr certainly has no shortage of clients. When asked how she advertises, she laughs and says she simply dresses herself and her children in her creations and waits for people to inquire where in Dakar they can go to buy such extraordinary outfits.

Madame Sarr now collaborates with two local tailors to produce larger volumes of clothing, which she exports to neighboring countries in addition to selling locally.  She recently sent 50 traditional dresses to Mali, where a contact will sell them on her behalf.  She has been very successful doing this because her creations are in high demand.

“Your funding helped me so much to support my family,” Madame Sarr wrote in a comment to lenders. “I am blooming thanks to you.  I can support my children: the older one is going to the university, the second one is at high school and the little girl is at the primary school. That is my family today, and you have helped me so much.”

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This spotlight article is based on comments originally posted by Julia Kurnia and Miriam Frost.  You may read more posts by Madame Sarr and Zidisha staff in Madame Sarr’s loan profile page.

A wonderful day at the Zidisha Youth Empowerment & ICT Foundation

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By Roberta Zenere, Volunteer Ghana Country Expansion Coordinator

Kumasi is the capital city of the Ashanti Region in Southern Ghana. On Saturday (March 15th) I travelled there to meet some of the Zidisha borrowers who live and work in Ashtown, a suburb in the center of Kumasi.  

Our first borrower from Kumasi was George Bonsu who is also the most dedicated Volunteer Mentor that we have in Ghana at the moment. He spread the voice about Zidisha within his community and now, out of the 52 active Zidisha borrowers, 17 are from Kumasi! All his assigned borrowers rely on him to get advice on how to manage their Zidisha loan and he is always willing to assist them. 

George raised two loans though the Zidisha platform maintaining an overall repayment rate of 100%. With the first loan of 44 USD he bought a PC and with the second loan of 238 USD he bought six more PCs.  The computers purchased are second-hand PCs, very simple in terms of specification, i.e. operating system, RAM, hard disk. This is why they were very cheap. In any case, they are enough for the purpose they need to serve.

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The loans supported him to achieve his dream of creating an Internet Cafè and training center within his community. He called his organization “ZIDISHA Youth Empowerment & ICT Foundation” (ZYEF) as a sign of recognition towards Zidisha that assisted him in making his project a reality and which is also assisting youths in the surrounding area. 

The ZYEF runs as an internet cafe point where people have the possibility to browse the Internet. Normally, this is the place where George’s friend who are also borrowers of Zidisha go to check their loan’s profile and post update for lenders (Internet browsing for Zidisha purposes is free!). Three times a week the ZYEF also offers ICT courses on several topics such as computer basics, Microsoft Office applications, computer/mobile phones hardware/software and graphic design. Classes started just few weeks ago and, at the moment, the students (both children and adults) enrolled in the course are eighteen. 

More importantly, the foundation is much more than an internet cafe or training center: it is a point for social aggregation where people can meet, interact and learn. Indeed, the place has soon become very popular, especially among the students of a nearby school, St Anne International School, which counts around 1,300 pupils from Kindergarten to Junior High School. 

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I was really amazed to see the social drive and commitment that drive George in running the ZYEF and in taking care of its members. I also had the opportunity to meet Nketsia Brew Nana, another Zidisha borrower from Kumasi and ICT teacher by profession who dedicates his free time to training children at the ZYEF course. He is passionate about everything related to computer and about teaching and he is eager to transfer his ICT knowledge to children to prevent them lagging behind in a world in which technology is the future. 

George also shared with me some projects for the near and long-term future. Currently, the ZYEF is raising funds to organize a quiz competition among 30 schools in Kumasi for testing and comparing their knowledge in ICT. Also, George is planning to offer Mobile Money services at his center to facilitate Zidisha borrowers in registering for Mobile Money, cashing-in their loans and sending loan repayments. Another great idea is to use part of the income from the internet cafe to create a small fund in the name of the ZYEF that can be used to lend through the Zidisha platform and assist new young entrepreneurs. In the long term, George aims to open new branches of the ZYEF around Kumasi and this will be probably the purpose of a third Zidisha loan. 

Finally, on Saturday I also met Ernest Fosuh, who just raised a second loan of 296 USD and Atta Gyamfi Gyamfi who recently joined Zidisha’s lending community. Both expressed appreciation towards the service offered by Zidisha and are quite satisfied about the improvements experience in their business so far. 

Social impact is a common expression that goes hand-by-hand with microfinance. On Saturday I had a tangible example of what the social impact of George’s loan is: education, youth empowerment, community development and inclusion. I am very happy that Zidisha made its contribution to make this possible and I am looking forward to see the future progress of this project. 

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Spotlight on Siaka Traore, Burkina Faso

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By Mien De Graeve and Julia Kurnia

Takalédougou is a tiny village in the vast interior of the desert country of Burkina Faso.  The nearest source of running water and electricity is fifteen kilometers away – a full day’s journey by donkey cart.

This is the place where a remarkable entrepreneur has his home and farm. Siaka Traore is also a very charming person and he switched fluently from French to English while he welcomed me last weekend and explained everything about his greatest passion: cassava (manioc) growing and everything related to it.

Because the national sugar company has commandeered most of the arable land in Takalédougou itself, Siaka’s cassava farm is located eight kilometers away from the village. At the foot of an imposing mass of rock, Siaka has transformed 2.5 hectares of desert into a source of food and employment for an entire community.

Siaka has divided the land into several parts, and planted cassava on each part at a different time in order to distribute harvests throughout the year. On the field with the youngest plants he mixed the manioc with watermelon in order to get the most out of the energy in the soil. This phased approach not only ensures a continuous supply of cassava, but it also helps smooth the traditionally uneven incomes of the villagers whom Siaka pays to assist with the harvesting.

Siaka used his first Zidisha loan of $963 to purchase a set of machines for grinding, sifting and pressing the manioc into a couscous-like food called attièke. Attièke is very popular and nutritious, and people in Burkina Faso enjoy it as a staple food, accompanied with lots of salt, raw onions, spices, oil and dried fish.

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In the past the women of Takalédougou were working day and night to grind as much cassava as possible by hand.  Grinding cassava by hand is not only backbreaking labor, but it is also very inefficient and produces attièke of inferior quality.  As a result, most of the harvest had to be sold unprocessed and thus at a cheaper price.

With the new grinding, sifting and pressing machines, Siaka is able to grind all of his own harvest, plus the smaller harvests of the women in the village. As the price of attièke is more than double that of raw cassava, the incomes of Siaka and the village women who use the machines have gone up dramatically.  As an added bonus, the husk grindings that are produced as a by-product are used to fatten the village’s oxen, pigs and chickens.

The first Zidisha loan was slightly more than what was needed to purchase the manioc processing machines, and Siaka used the remainder of the funds to purchase a solar panel.  The solar panel powers a light, which allows Siaka to use the grinding machine in the evenings, freeing up his daylight hours for working in his fields.  Siaka’s solar panel gives the residents of Takalédougou one more reason to congregate at his house: they rely on it to recharge the batteries of their mobile phones.  The phones, which increasingly come with internet as well as voice and text capabilities, connect the people in this remote place with the outside world – and an ever-widening landscape of opportunity for a better life.

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Siaka used a second Zidisha loan to purchase a motorized vehicle to carry fertilizer to his fields, and to transport the cassava to storage and to his customers after harvest.  Previously, he had been using an ox cart for this work, and the slowness of this form of transport had become an obstacle to further growth of his business.  The new motorized vehicle increased his production capacity so much that he has now hired a team of other villagers to help him produce attièke from the harvested cassava.

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With the resulting revenue, he built a large new home for his family, pictured below.  He insists such a home would never have been within reach if it were not for the Zidisha loans.

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Siaka has since repaid his first two loans, maintaining a 96% on-time repayment rate over the 23 months since he first joined Zidisha.  This solid track record earned him the right to raise an even more substantial amount, and his third loan of $1,567 was funded by over 30 lenders from around the world.

Siaka plans to use this latest round of financing to construct three rooms to house his rapidly growing manioc business, and protect him and his employees from the elements and from intruding livestock while they process and package the attièke.  

Siaka’s business is a beautiful example of efficiency and vision and these characteristics allowed him to really make the best out of the funds he received. He is so grateful for the chance he got and he has asked us many times to thank Zidisha and all individual lenders. He is now very confidently looking into the future and he hopes he can continue to walk along this way for a very long time. He dreams of providing jobs to more people, of arranging contracts to provide neighboring schools with a steady supply of attièke, and of traveling to Ghana and perhaps even the United Stated to practice his English.

Last fall Siaka posted this update:

Dear’s zidisha members
I can’t stop to thank you night and day. I’m so well with all of my family. As the name of your institution, I’m growing up day by day. The moto taxi makes my job to be very easy for me to transport cassava from the farm to my small factory and also to sell the attieke from the factory to my different customers in beregadougou, tarfila, bounouna, banfora and toussiana .Most of news customers are calling me in many area in Burkina.
I received two person last Thursday 29th of one project in Burkina because they hear that I’m making good attieke; and they want to know me better and hear from my mouth how I’m producing it and who is my helper? I tell them that I’m working with ZIDISHA. They were surprise to listen this name. I was too happy to give them information about ZIDISHA and tell them that I’m a volunteer of zidisha. In this cage I thank the family who introduce me in zidisha by the grace of their daughter who is the first Peace Corps volunteer in Takaledougou.
Dears ZIDISHA lenders! I’m thanking all people who give me money for my business and I’m asking them to don’t worry about the repayment. If I’m in good health with all of my family, to pay the loan is a small thing for me. My best wish today is to see one zidisha lender in my village only to know me better and know my small factory.
Yours for ever SIAKA in TAKALEDOUGOU

It is an incredible thing that a technology platform like Zidisha can make it possible for a highly motivated entrepreneur living in one of the most isolated places on earth to team up with supporters all over the globe to make this kind of change happen.

If the past is any indication, this new loan will generate great returns in the form of better earnings and growth opportunities for Siaka and all those who now earn a living from the business he and his lenders have built together.

You may view Siaka’s own account of his business growth at his Zidisha profile page.