Empowering entrepreneurs in developing countries
The world looks flat in the age of the internet. You can send a message thousands of miles with the push of a button or the swipe of your thumb. But there is an unseen barrier between you and the other side of the world. An economic barrier separates small businesses trying to bootstrap from the rest of the world. Julia Kurnia, founder of Zidisha, is leveling that economic barrier by empowering entrepreneurs to launch their businesses using crowd-funded loans.
Growing the local economy
On Thanksgiving Day in 2008, Julia Kurnia was working in Niger managing government grants. When she was finishing up her dinner, a bowl of millet porridge and baobab leaves, she looked down to see a group of children surrounding her. At first she thought they were just curiously studying her, a foreigner. She quickly realized they were eagerly waiting for her to finish so they could have the leftovers. Julia wrote in a Huffington Post article “These children were locked already in a grim contest for survival.” From her extensive work in NGOs, Julia knew that handouts wouldn’t solve the problem.
Getting a loan in emerging markets like Africa or Asia is no easy task. Worse, the average interest rate for young adults looking for a loan is prohibitively expensive at 37%. This leaves entrepreneurs stuck between a rock and a hard place: take a borderline predatory loan, or try to bootstrap their new business.
“Most borrowers are residents of economically disadvantaged urban settlements, who are just entering the working population. They are typically supporting siblings, children, or trying to put themselves through college,” says Julia. “They raise loans to buy assets – a sewing machine, a motorbike taxi, larger inventories of food or clothing for sale – that can grow those businesses and dramatically increase their incomes.”
In 2009, Julia founded Zidisha to give entrepreneurs a new way to launch their businesses and grow their local economy. allows lenders with a credit card or a PayPal account to loan anything from one dollar to a small fortune. Lenders set their own interest rates, and receive weekly payments from borrowers that they can withdraw or use to help finance other borrowers.
The tech behind Zidisha
Using Telerivet (powered by Twilio Programmable SMS), Zidisha manages all their communication between themselves, borrowers and lenders without having to write code or deploy servers. When it came to choosing a messaging medium, Zidisha went with the most common denominator of communication: SMS.
Most entrepreneurs in developing countries don’t have regular access to computers and use cybercafes to access the internet. Getting to cafes can be a haul for borrowers waiting for an email about their loans. Zidisha uses SMS as a pro-active and direct form of communication that doesn’t put borrowers through a hassle. “Borrowers often do not check email frequently. Often, only when they receive an SMS notification of a lender comment, borrowers know to go to a cybercafe to post a response,” Julia said.
Communication between Zidisha, borrowers, and lenders is essential to make sure the loan is being put to good use, and to raise awareness about the power of crowd-sourced microfinance. Entrepreneurs in developing countries need to know there’s an alternative to predatory bank loans. People with the means to provide loans need to know that they can replace the banks as a financial resource, and increase the chance of that borrower escaping poverty.
Giving young adults the ability to bootstrap their businesses in economically struggling environments is big challenge to tackle. But with every text, every interaction, and every dollar loaned, the challenge seems more surmountable to Zidisha.