Dear Modern Microcredit,

I am surprised that you find Zidisha to be insufficiently transparent. Zidisha has room for improvement in many respects, but we've always considered transparency to be a strong point of our platform.

We have more detailed statistics on repayment rates, trends in repayment performance over time, and risk levels in currently outstanding loans than any other microlending website I know. For example, Kiva, Kiva Zip, United Prosperity, and other well-known microlending websites do not even publish Portfolio At Risk statistics.

Since Zidisha is a direct P2P model, our repayment rate is not inflated by "phantom payments" reported by local intermediary partners. (http://blog.givewell.org/2009/10/13/kiva-repayment-data/) When we report a repayment as having been made, that means the borrower truly did make that payment.

We make it very clear to prospective lenders that lending through Zidisha is risky. Here are some excerpts from our website:

"Zidisha is a low-cost nonprofit community managed by volunteers. Our purpose is to connect individuals in marginalized countries with the chance to improve their lives through affordable loans. We are not a financial institution or an investment service, and Zidisha is not a safe place to store your savings or financial assets. We recommend you treat lending through Zidisha as a philanthropic activity, and that you not lend any funds that you cannot afford to lose." (first paragraph, Trust and Security, https://www.zidisha.org/index.php?p=123)

"Is Zidisha a safe place to store my savings? No. Zidisha is a platform for philanthropy, not a replacement for traditional savings accounts or financial investments. Zidisha loans are highly risky, and direct person-to-person lending across international borders is such a new endeavor that expected losses cannot be predicted with sufficient accuracy to make Zidisha loans a safe way to store funds you cannot afford to lose. We recommend that you treat Zidisha loans simply as a way to help others, and that you lend no more than you would normally be prepared to give away to charity." (Lender FAQ number one, https://www.zidisha.org/microfinance/faq.html)

"The principal purpose of Zidisha's lenders in funding loans is to improve the lives of these entrepreneurs, and not to make a profitable financial investment. Lending to entrepreneurs through Zidisha involves a meaningful risk of loss of your principal lent. In addition, you are very likely to lose money in real terms on any loan you fund, even if it is repaid by the borrower, as a result of currency exchange rate changes, PayPal fees applied to uploading credit to your lender account, inflation and other factors affecting the value of principal and interest payments made by a borrower. Accordingly, we recommend that you consider lending through Zidisha to be a philanthropic activity, and you should not lend more money through Zidisha than you are prepared to lose." (Terms of Use, https://www.zidisha.org/index.php?p=5)

More generally, our website code is open source (https://github.com/Zidisha/zidisha), and conversations among our volunteer staff take place in public in Zidisha's forum. (https://www.zidisha.org/forum/categories/volunteer-conversat...). Our operational procedure manual is published on the internet for anyone to see. (https://sites.google.com/a/zidisha.org/zidisha-staff/)

If anything, we are transparent to an extreme.

I do agree that Zidisha loans are not viable as a purely financial investment. Financial investment is not the purpose of our platform. And that is exactly what we are communicating to prospective lenders.

Best regards,

Julia Kurnia
Director, Zidisha