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Comment by _bfhp | Hacker News Reader

Aren't microloans like, disastrous when push comes to shove? Can't find the specific article but..

Hi detcader,

That is a really good question for debate. You may see my views on it here: http://www.quora.com/Microfinance/Do-the-micro-loans-contrib...

Most of the people that I have loaned to through Kiva are people with a very low standard of living (relative to the west) which means they do not have access to computers and without the Kiva field partners they would not have been able to obtain a loan. Does Zidisha do anything to address this? The interest rates that Kiva field partners charge aren't great (and it's great to see an offering that goes a long way to solving that problem, along with allowing loan forgiveness!) but they seem to be a necessary evil, as they support the expense of helping people who don't have the ability to request a loan directly.

For example, can I use Zidisha to support people like Salamatu: http://www.kiva.org/lend/625549, or is Zidisha something I should use alongside Kiva to help the more fortunate borrowers?

The assumption that poverty = lack of access to the internet was pretty generally true until about five years ago.

Today, the generation just entering the working population in developing countries still live on pretty meager incomes, but unlike their parents, are commonly on Facebook and able to participate in an online community without any intermediation from local organizations.

Most Zidisha borrowers are young adults living on about a dollar a day in the urban slums of Africa and Asia. They often have high school degrees and many are enrolled in university, but they live in sheet-metal shacks in muddy streets lined with sewage. They help support their families by searching for low-pay day labor or selling small inventories of low-value items. They usually access our website via public cybercafes (the price to browse the internet in Nairobi is just about ten cents).

So to answer your question, to support Salamatu herself you would probably need to lend through Kiva or another local organization. But if Salamatu has children, they may well be raising their own microloans through Zidisha someday.

Here is a story about one of our members who operates a cybercafe in Nairobi, which gives a pretty good idea of how young adults in developing countries are going online: http://p2p-microlending-blog.zidisha.org/2013/06/12/life-wil...

I get pretty good feedback from Kiva, I donate regularly to farmers mostly who are producing fair trade goods such as http://www.kiva.org/updates/partner/599794. Given they need a loan, better to get it low interest and from reputable lenders.

A lot depends on the rate money is lent at, after all expenses involved have been tacked on. At 10%APR, it's going to be a big help to anyone with a sound business plan (and probably manageable if its actually a consumption loan for a wedding or medical bill). At >100% APR, even a very sound investment runs the risk of becoming unmanageable debt, and some microloans fall into the latter category. Kidisha's rates fall into the former category.

I'm more intrigued by the disruptive prospect of getting foreign funds for people looking to set up SMEs in developing countries to raise people out of poverty by giving them regular employment, which seems to get less attention. (of course it's possible that's because traditional banking does an adequate job, but unlikely)

GiveWell has some interesting thoughts on microfinance: http://blog.givewell.org/2009/10/23/6-myths-about-microfinan....

Hi BvS,

Microfinance as a poverty-fighting tool is hotly debated among donors. Here is a recent post about why we believe microfinance is healthier and more effective than handout-based charity: http://www.huffingtonpost.com/julia-kurnia/about-to-send-a-d...

But don't just take my word for it. I'd encourage anyone interested in what microfinance borrowers themselves say about their loans to check out our universal member comment feed. This is simply an uncensored feed of the latest 100 comments posted on Zidisha loan profile pages by our members worldwide. It gives some insight into the wide variety of loan uses and results, and how the borrowers themselves describe the impact of microloans in their lives: https://www.zidisha.org/microfinance/testimonials.html

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