Story of the week: Milcah Muthoni, Kenya


By Lisbeth Overheu, Kenya Client Relationship Volunteer

Milcah Muthoni has had an interesting life to say the least. She grew up in Nyandarua north of Nairobi in Kenya. With her parents both working as casual labourers on a farm and eight children to support, they couldn’t afford for them to go to school. However, when Milcah’s father got a job as a watchman in Nairobi the family relocated and she was able to start attending an informal neighbourhood school when she was around 10 years old.

Milcah’s father passed away when she was a teenager but a sister at their church, recognising Milcah’s potential, paid for her to continue studying up to Standard 8 so she was able to complete her KCPE (Kenyan Certificate of Primary Education) and even one year of high school.  

When she was 18, Milcah gave birth to her son Martin, but she found it very difficult to cope as a young, single mother and tells of how she became very desperate, succumbing to alcohol and drug abuse and often neglecting her baby, feeling that her life was over. With support from a European missionary, Milcah managed to move beyond her destructive behaviour even becoming a volunteer with the organization helping other vulnerable youths.

In time she met her husband, Francis, and they had another son, Joseph. They also support two young girls. Mary Wanjiku’s single mother, a relative of Francis’, was unable to support her four daughters so Mary lives with Milcah and Francis and is doing very well in Form 1. Faith is an orphan Milcah literally met on the roadside around two years ago and she now also lives with the family and enjoys her Standard 7 studies.


Soweto (photo courtesy of Flickr

The family of six live in a two-roomed house in the Soweto slum area near Kahawa West in north eastern Nairobi. Their small house is wooden framed with iron sheets forming the walls and roof, and as Milcah and I looked at the small but numerous holes in the roof she confirmed the rain does come in sometimes. They share several long drop style toilets with many other nearby households which are reached along a winding labyrinth of small alleyways and are several hundred metres from their house. 


Milcah with her cookers (stoves) getting ready to make dinner

Milcah’s main source of income used to be from bags and bracelets she made and sold. But with the main market for these items being foreign tourists and the current downturn in the Kenyan tourism industry following several terrorist attacks, she has had to look elsewhere for enough income to support her family. Fortunately, several years ago Milcah was taught how to use charcoal waste to make charcoal briquettes which people use for cooking. So the production of these briquettes is now her main source of income and nowadays Milcah is even hired by some NGOs to train others in how to make the briquettes.


Charcoal briquettes drying outside Milcah’s home

About six years ago, Milcah broke her leg in a car accident, and she still suffers some pain in her left leg especially when she has to walk long distances, walk up or down stairs or when it is cold. She also has some nerve damage on her left side occasionally losing sensation and use of her left hand and arm. Milcah was also very sick at the end of last year which led to her inability to make some of her Zidisha loan repayments on time but she is now back to full health and doesn’t let her car accident injuries slow her down.

When she’s not working to support her family, Milcah certainly stays busy. On Fridays she volunteers at the nearby hospital as a Community Health worker assisting with tasks such as weighing babies and taking their temperatures. Milcah is also involved with the local community based organization the Mwambo (raising up) Foundation, which offers a variety of services to the local population such as drug and alcohol counseling, gender-based violence prevention training, a small free preschool for young children and they recently began distributing sanitary towels to teenage girls whose parents can’t afford them, so that the girls do not need to miss school for lack of sanitary towels.


Milcah’s brothers, Samuel and Joseph, making a briquette drying rack for a neighbour

On this particular afternoon Milcah and I are talking in her living room having looked at the machine she uses to make the charcoal briquettes (pictured above) and checked how well the briquettes were drying on racks in the cool and damp Nairobi winter. The three youngest children burst through the door home from primary school and while Faith is soon off to meet big sister Mary on her walk home from high school the two boys settle down to do their homework hoping to complete it in time to watch that evening’s World Cup football match.


Joseph working on his Standard 2 math homework while Martin focuses on his Standard 8 Swahili homework

Milcah wants all four of her children to be able to finish school and possibly even college or university but she struggles to pay all their school fees and support the family with her monthly earnings from the briquettes being around US $100 – 200, as well as the irregular money Francis is able to earn as a casual labourer. In order to educate her children, Milcah would like to expand the briquette making business as the demand is high from customers who prefer briquettes to traditional lump charcoal as it is cleaner and cheaper.

As Milcah, Martin and Joseph walk me to the bus stop for the long ride back into Nairobi city, Joseph admires a battered bicycle being ridden by another child and asks if he can have one. At the moment that kind of expenditure is beyond the family’s reach but hopefully in time they may be able to afford such luxuries as Milcah’s briquette business expands with the help of the Zidisha community.

Milcah has nearly finished repaying her first Zidisha loan, after being delayed by illness last winter.  You can sign up to receive a notification when Milcah posts her next loan application in the “Follow” section of Milcah’s Zidisha profile page.

Story of the week: Bernard Tangus


An entrepreneur is someone who sees opportunity where others see only problems.

Like many other young adults in Kenya, Bernard Tangus completed university only to be faced with a dearth of professional employment opportunities.  Putting aside dreams of becoming a manager in a hotel or international company, Bernard returned to his hometown, a slum neighborhood called Ponda Mali in the outskirts of Nakuru.

The residents of Ponda Mali live in makeshift homes roofed with sheet metal.  There is no public sanitation service, and the dirt roads turn to mud in the rainy season.  Residents lack running water.  When Bernard arrived, there was no source of clean water in the entire community.  There were constant outbreaks of cholera, typhoid and other water-borne diseases.

Bernard had found his calling.  Within a year, he was sourcing treated drinking water from the city government and distributing it for a nominal price to the residents of Ponda Mali.  The demand for clean water was immense, but Bernard lacked the capital to increase his production capacity.  In February this year, he approached Zidisha for a loan.

The first loan, of just $150, was enough to purchase two more 10,000 liter water tanks.  Each tank was installed in an easily accessible location of Ponda Mali, and regularly refilled with treated drinking water.  In each location, Bernard hired a local resident to manage sales and care for the water tank – creating employment while improving health in the community.  The venture was a success, and in April Bernard raised a second loan of $473.  He is investing that capital in additional water tanks, each managed by a resident of the local community.

Bernard has used a relatively small amount of loan capital to improve the lives of hundreds of people.  He is now responsible for distributing thousands of liters of water every day to homes throughout Ponda Mali.  But he has never forgotten to share news of his success with us.  Today, he posted this update:

“To all my lenders, thank you a lot. Because of you, Elimika Primary school will now have water within their school compound. Through your lending, I bought a water tank for the school.”


You may learn more at Bernard’s Zidisha loan profile page.

Is direct P2P microlending financially sustainable?


By Julia Kurnia, Director

At Zidisha, we are pioneering something that has never before been tried: direct person-to-person lending across international borders, without any local bank intermediaries, loan officers, or brick-and-mortar offices.  It’s a disruptive innovation that has dramatically reduced the cost of lending to the world’s most marginalized communities.

Web-based P2P microlending is so different from traditional staff-intensive microlending methods that developing it has involved a lot of trial and error.  With no road map to follow, experience was the only way to know for sure what would work. Since founding Zidisha in 2009, we have continuously adjusted our lending model in response to actual user behavior.

This is a by no means exhaustive list of the changes we have made in the past year alone:

  • Requiring loan applicants in most countries to link a unique Facebook account to verify their online identity and make it more difficult for third parties to create proxy accounts
  • No longer requiring loan applicants to have a credit history with a local bank in order to join Zidisha, as this proved too difficult to reliably verify
  • Enlisting the help of fellow borrowers to mentor new members and follow up on repayments, as many borrowers were keen to volunteer and play a larger role in the Zidisha community
  • No longer contracting with local organizations to perform credit checks, as this was difficult to scale without opening the door to bribery
  • Using an invite bonus program to encourage borrowers in good standing to invite trustworthy new members
  • Relaxing admittance criteria (which had been too easy to game in practice), and reducing the size of first-time Zidisha loans to limit losses until a borrower has proved their reliability
  • Establishing strict on-time repayment performance standards in order to progress to the next loan size
  • Displaying on-time repayment scores on each loan page to encourage borrowers to keep this metric high
  • Replacing recommendation forms signed by community leaders with SMS verification of loan applicant identities with family and neighbors
  • Using machine learning to detect fraudulent applications
  • Transitioning from monthly to weekly repayment schedules in most countries, as it proved easier for most borrowers to make small weekly payments than to save up bulk sums each month

This graph tracks changes in on-time repayment rates at Zidisha since we initiated most of these changes:

Image Notes:

  • Since the timeliness of the first repayment installments correlates with the ultimate on-time repayment rate of Zidisha loans, we track that as an early indicator of changes in credit risk.  This graph depicts the timely repayment of both first installments, and cumulative installments for all loans issued during the time period in the x axis.
  • The graph does not track whether the installments were ultimately repaid, only whether they were repaid on time.
  • “Repaid on time” is here defined as paid within ten days of the due date, within a threshold of $10 of the amount due.

You may view the loan data used to generate this graph here.

We estimate that the ultimate repayment rate for loans that were issued in early 2013 will be between 70% and 85%.  (We do not know more precisely because many of them are still repaying.)  Many lenders who funded loans at low interest rates during that period saw the value of their funds decline as unpaid loans were written off.

What is less obvious to our long-time observers is that credit risk at Zidisha has improved substantially over the past year.  If the timeliness of the first repayment installments continue to predict the ultimate repayment likelihood of Zidisha loans, then the loans that are being issued today will have substantially higher repayment rates than those issued a year ago.  If we assume that the ultimate repayment rate will improve in proportion to the timeliness of the first repayment installments, an ultimate repayment rate of between 85% and 95% would be a reasonable prediction.  Thanks to this improvement, it is entirely possible that lenders who fund loans at modest interest rates today will be able to maintain or increase the value of their lending funds over time.

An interesting case in point is the Zidisha Matching Loan Fund.  This $10,000 fund uses our automated lending tool to match, dollar for dollar, bids made manually by Zidisha lenders at the same interest rates originally bid by the manual lenders.  It is therefore a reasonable proxy for the lending experience of a typical Zidisha lender.

The Matching Loan Fund began lending in February 2014.  Since then, the fund has distributed $15,253 to 568 different loan projects.  (The amount distributed is more than the $10,000 put into the fund because repaid funds are recycled to new projects.)

Of those 568 loans, 128 have been repaid.  In total $2,030 had been disbursed to those projects, and they repaid $2,295.  Returns from interest plus currency fluctuations were $265, or 13% of the value of the amount disbursed.


The remainder of the loans are still outstanding.  Of the $13,223 disbursed, $3,155 has been repaid, and $10,329 is principal outstanding – so the loan fund has gained a further $261 from interest and currency fluctuations realized thus far for the loans still outstanding.

In all, the fund has gained $526, or 5.2%, of the original $10,000, in the past four months.  If current trends continue, the fund will gain more than 15% of its original value in interest net of currency fluctuations.

Net returns will almost certainly be lower than 15%, because some portion of the loans outstanding will likely be lost to borrower misfortune or default.  Zidisha has not been around for long enough to predict losses with certainty.  But if the overall repayment rate is above 85%, then gains are likely to exceed losses.

Zidisha is intended as a platform for philanthropy only.  We do not recommend it as a commercial investment because the risks inherent in such a new lending model probably outweigh any possible financial return.  It is certainly not a safe place to store assets one cannot afford to lose.

But it is reasonable to expect that the majority of lenders who fund a diversified selection of loan projects today will be able to maintain the value of their funds over time, so that they can continue to offer life-improving loans at affordable rates to many more deserving entrepreneurs.  The resulting humanitarian impact makes Zidisha loans one of the best “investments” one can make.

View our latest loan projects here!


Zidisha invited to inaugural Global Accelerator at the United Nations


By Julia Kurnia

We were incredibly honored to receive an invitation to serve as a delegate representing the entrepreneur community at the inaugural Global Accelerator at the United Nations in New York.

The event brought together the founders of 100 of the most game-changing social enterprises from around the world, and eminent entrepreneurs such as Michael Dell, Arianna Huffington and Ashish Thakkar.  The delegates worked with leading UN officials to accelerate solutions to accelerate achievement of the Millennium Development Goals: advancing youth employment, gender equality, clean water and more.

The UN officials were especially interested in the way Zidisha has created self-employment and job creation opportunities for young adults in developing countries by connecting them to the international person-to-person lending market.  I had the opportunity to share our work with officials from the UN Development Program, the UN Secretary General’s Envoy on Youth, UNICEF, and the UN First Ladies’ Conference, and representatives from the Bill and Melinda Gates Foundation and Global Health Corps.

Being invited to such a select gathering soon after our graduation from Y Combinator, Silicon Valley’s top startup incubator, shows that Zidisha is gaining prominence not only in America’s tech startup community, but also among world leaders who are working to improve conditions in the most marginalized countries.  It’s an incredible validation of what we have built, and everyone whose lending, transformation of loan capital into thriving businesses, volunteering, advice and financial support helped make our lending community what is today should be proud.

The ripple effects of a loan

This is to inform my lenders and all the Zidisha fraternity about the results of this loan.  It’s through your your help that one more youth has been employed in my business. This bright young man finished his primary education with flying colours but due to lack of school fees he was unable to proceed with his education, his single mother could not afford to take him further than that.  And due to his lower level of education the man has failed to secure a permanent job for years until now when you funded my business, it ensured increased purchases and sales hence the need for another person to help in transporting the merchandise to and from the warehouse.

Your kind help has gone a long way to create a smile on this young man’s life.  Even though his starting salary is little compared to the cost of living, he could not hide his happiness on securing this job. I will post his photos for all to see how you are touching people’s lives. Thanks a lot.

– Posted by Newton Okwara in Maili Sita, Nakuru, Kenya on 11 June 2014


Story of the week: Joyce Fondo


A blur of inconspicuous villages hug the main road as I make my way by matatu bus to Tezo, a small village on the coast of Kenya.  Already from outside I can smell the sweet fragrance of freshly baked scones.

As I enter the Fondo compound, a petite woman with a gentle smile greets me with a warm embrace, one of those usually set aside for old friends. Her husband, Albert, does the same.  I feel instantly at home.  A community within a community, the Fondo’s residence could be a small neighborhood, for their compound is made up of several houses, a nursery school, and a newly built kitchen. Generations upon generations live here.


The Fondo family compound


I happily accept a tour around the Fondo neighborhood, our first stop being the nursery school. The school began in 2012 with no more than two students, one chalkboard, and a piece of wood sitting atop a couple of rocks acting as a bench.


The nursery school, October 2012


After only a few months, this school of two quickly grew to thirty-one, and today has well over seventy students. Being former teachers, it seemed a natural progression for Joyce and Albert to offer a place of education to the community of Tezo.  HIV/AIDS has caused many children in Tezo to become orphans, leaving them with few or no educational options. Most of the student body consists of orphans, and the Fondo’s school provides them with new beginnings and opportunities.


Nursery school students with Joyce and Peace Corps Volunteer Jennifer Grimm, October 2013


In addition to teaching at the nursery school, Joyce and her husband also volunteer as Community Health Workers, as part of a program in Kenya that brings health education and basic clinical services to rural villages.  In this position, the two of them serve as front-line medical contacts for twenty families, whom they teach how to live a healthy life while administering vaccinations and preventative treatments to children to protect them from diseases like polio or tetanus.

But of course, volunteers also need to make a living.  Joyce and Albert therefore run a bakery.  In order to acquire more information about how to increase its profitability, they attended a business class that was held by SCOPE, a community development organization.  That is how Joyce got to know Jennifer Grimm, a US Peace Corps Volunteer who had been helping local residents access Zidisha loans.

At the time, Joyce was using a simple pot heated with coconut husks to bake bread, only allowing one roll to be made at a time. In speaking with Jennifer, Joyce realized that she could use a loan to purchase a commercial oven made by a local craftsman.



Joyce holding the coconut husks she used to bake bread one roll at a time 


Joyce raised her first Zidisha loan of $484 in September 2012 and used it to purchase the oven – increasing her production capacity dramatically.  The new oven allowed her to bake up to 100 rolls at a time!  She hired employees to produce rolls in large volume to satisfy the demand of customers in Tezo and the nearby town of Kilifi.




The new oven


Fresh rolls waiting to be baked


Joyce repaid her first loan and raised another, of $813, in November 2013.  This time she used the capital to install electricity in the bakery to enable production before sunrise, and to add windows to improve the air quality in her baking room.  She also used a part of the loan funds to purchase a wooden cart.  With the cart, Joyce’s son can sell scones and also juices at the local market.


Joyce serving fresh rolls to a friend


A year and a half after joining Zidisha, Joyce enjoys a dramatically higher income thanks to the increased production and distribution capacity that resulted from the oven, electricity installation and delivery cart purchase.  She uses the revenues to pay for her grandson to attend a quality secondary school, in addition to supporting herself and her husband while they carry out their volunteer work as teachers and health workers.  “Zidisha has helped me so far,” Joyce said.  “Now I have a stable income.”

The love and cohesion of Joyce’s family and their contribution to the community is incredible.  I wish them all the best!

The Fondo family


This article is based on blog posts by volunteer Kenya Client Relationship Managers Traci Yoshiyama and Theresa Schneider.  You may view more comments and photos at Joyce’s Zidisha loan profile page.