Jan 4, 2013

Kiva Zip brings Person-to-Person Zero interest mobile Loans to Kenya


Kiva.org is running a pilot project dubbed as Kiva Zip, which will enable person-to-person (p2p) microlending in Kenya.  Kiva Zip is using M-PESA to disburse funds and manage repayments. 

Kiva Zip aims to provide underbanked and unbanked individuals with access to crowd-funded zero interest loans with no collateral, to invest in their business. 

How Kiva Zip Works
Kiva Zip is partnering with individuals, who they call Trustees, to identify borrowers worth of a small 0% interest loan. All borrowers must be registered MPESA users.

Metropol (Kiva Zip has partnered with Metropol to do borrower verification and collections)  helps Kiva verify that the borrowers are who they say they are.
Once each of the borrowers’ identity has been confirmed, the trustee writes a short paragraph about each person, outlining why he has chosen to endorse them for a loan.
Each of the borrowers applies for a Kiva Zip loan online, filling out a borrower profile.
The borrower’s loan, photo and business description are posted on the Kiva Zip website to be funded by an online community of lenders around the world.
The borrowers receive the money through M-PESA and use it to expand their business.  The maximum loan size is KES 70,000 and it may take 2-3 weeks before borrowers receive money because the loans are crowd-funded.
Scaling p2p microlending
Kenya has been at the forefront of mobile payments technology revolution and there is a large population of underbanked and unbanked individuals. It’s no surprise therefore that Kiva chose Kenya to carry out the pilot project in mobile p2p lending.

 The ultimate goal of Kiva Zip is to create a global village bank by allowing lenders to send money directly to borrowers. 

Implemented well, Kiva Zip could usher in a new era of financial inclusion in Africa.