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I am invested in microfinance and want to invest more, but there's a constant news stream of problems with the providers and I'd really like to know who I shoul

by briholt 12y ago

I am invested in microfinance and want to invest more, but there's a constant news stream of problems with the providers and I'd really like to know who I should invest with. This article references a few complaints about Kiva's lack of transparency. Two weeks ago there was an HN article on Zidisha's lack of transparancy [0]. Zidisha's website lists their repayment rate at 74.31% [1], which seems very low compared to other providers which report 90%+. This author likes MyC4, but they appear to focus on European investors (given the Euro currency symbol). If anyone has any solid suggestions on who I should invest with, I'd love to hear them. [0] https://news.ycombinator.com/item?id=7546394 https://news.ycombinator.com/item?id=7546394 [1] https://www.zidisha.org/index.php?p=43 https://www.zidisha.org/index.php?p=43

mfheretic 12y ago
I saw the HN article questioning Zidisha - Modern Microcredit I think. My experience has differed from that author's impression, and I have tried to be as transparent as possible to explain with hard data why. But I cannot explain HOW this difference in experiences with Zidisha occurs. My concerns with Kiva are more far-reaching, but no point going over that now. I receive many emails asking precisely this question, which prompted me to embark on an overview of the sector, explain the options available (there are more than you might think!), and to examine the individual players in each option. Ultimately you need to decide what you actually seek to achieve, and which model you prefer. Do you need to use a P2P at all, for example? What about simply opening a savings account in a regulated microfinance bank and leaving your funds there, potentially earning a small interest rate? Your funds will be used for the same purpose, lending to microfinance clients, but you won't know which? And if you prefer the P2P mechanism, as far as I can see the key questions are: lend or donate? Lend at interest or interest-free? Lend via an MFI or directly? Once you answer these questions you will have narrowed your search down significantly, and can then do a more detailed analysis of the options available. I think you should think about these questions, and be aware of the options, before you try to select who you should invest with. You are right that MyC4 is euro denominated. However, I had a quick look at their FAQ: https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST Seems to be available to everyone.
jkurnia 12y ago
It is true that 74% of loans whose final repayment due date has passed have been repaid. We expect the ultimate repayment rate of those loans will be higher than that, because many loans are repaid after their due dates. In addition, most of the loans covered by the historical repayment rate displayed in our website were issued over a year ago. Our repayment performance has improved substantially in the past year, such that risk level of loans currently being issued is lower than our historical repayment rate suggests. Zidisha is still not a safe place to store savings or a lucrative investment opportunity, but I think it's reasonable to expect that the value of lending funds can be preserved over the long term, while offering financing opportunities at dramatically lower cost to the borrowers. As a nonprofit philanthropic platform, that is Zidisha's purpose.
- briholt 12y ago
  It'd be really nice if you offered more detailed stats, especially a CSV of all loans with all relevant info. (Maybe you do have this and I just didn't see it on the site). I'm sure there's a lot of data scientists who could pull a lot of useful information. Kiva has both an API and a graphical search of all loans. I did some simple analysis on Kiva's loans and that influenced some preliminary investing. I don't intend to make any money, but applying stats is part of the "fun" for me.
  - jkurnia 12y ago
    We do offer access to the data that makes up the graph depicting trends in on-time repayment rates at Zidisha: https://www.zidisha.org/index.php?p=114 https://www.zidisha.org/index.php?p=114 It generates a simple table with the repayment performance of each of the 6000+ loans that have been funded through our platform, with links to the individual loan profile pages. We'd definitely like to offer an API similar to Kiva's, when web development resources allow.

by briholt 12y ago

mfheretic 12y ago

I saw the HN article questioning Zidisha - Modern Microcredit I think. My experience has differed from that author's impression, and I have tried to be as transparent as possible to explain with hard data why. But I cannot explain HOW this difference in experiences with Zidisha occurs. My concerns with Kiva are more far-reaching, but no point going over that now. I receive many emails asking precisely this question, which prompted me to embark on an overview of the sector, explain the options available (there are more than you might think!), and to examine the individual players in each option. Ultimately you need to decide what you actually seek to achieve, and which model you prefer. Do you need to use a P2P at all, for example? What about simply opening a savings account in a regulated microfinance bank and leaving your funds there, potentially earning a small interest rate? Your funds will be used for the same purpose, lending to microfinance clients, but you won't know which? And if you prefer the P2P mechanism, as far as I can see the key questions are: lend or donate? Lend at interest or interest-free? Lend via an MFI or directly? Once you answer these questions you will have narrowed your search down significantly, and can then do a more detailed analysis of the options available. I think you should think about these questions, and be aware of the options, before you try to select who you should invest with. You are right that MyC4 is euro denominated. However, I had a quick look at their FAQ: https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST Seems to be available to everyone.

jkurnia 12y ago

It is true that 74% of loans whose final repayment due date has passed have been repaid. We expect the ultimate repayment rate of those loans will be higher than that, because many loans are repaid after their due dates. In addition, most of the loans covered by the historical repayment rate displayed in our website were issued over a year ago. Our repayment performance has improved substantially in the past year, such that risk level of loans currently being issued is lower than our historical repayment rate suggests. Zidisha is still not a safe place to store savings or a lucrative investment opportunity, but I think it's reasonable to expect that the value of lending funds can be preserved over the long term, while offering financing opportunities at dramatically lower cost to the borrowers. As a nonprofit philanthropic platform, that is Zidisha's purpose.

briholt 12y ago
It'd be really nice if you offered more detailed stats, especially a CSV of all loans with all relevant info. (Maybe you do have this and I just didn't see it on the site). I'm sure there's a lot of data scientists who could pull a lot of useful information. Kiva has both an API and a graphical search of all loans. I did some simple analysis on Kiva's loans and that influenced some preliminary investing. I don't intend to make any money, but applying stats is part of the "fun" for me.
- jkurnia 12y ago
  We do offer access to the data that makes up the graph depicting trends in on-time repayment rates at Zidisha: https://www.zidisha.org/index.php?p=114 https://www.zidisha.org/index.php?p=114 It generates a simple table with the repayment performance of each of the 6000+ loans that have been funded through our platform, with links to the individual loan profile pages. We'd definitely like to offer an API similar to Kiva's, when web development resources allow.