Sep 25, 2021
I would like to know if pay it forward a loan or donation
And why is it that zidisha team doesn't show concerned about our credit limit
Why is it that we repaid much into the community but community gives us small amount in addition
Agnes Armoh, Joseph Sam, Grace Boakye, Ofori Foster, Emmanuel Gyamfi, Mukichi Getrude, Akwasi Tweneboah, Sofada Kwabena, Emmanuel Narh Amanotey, Dubick Akua, John Appiah and Francisca Aikins like this.
Sep 25, 2021
Thank you Brakowah and agree with which zidisha needs to explain to us if borrower's works for the community or is the community helping the borrower's
Grace Boakye, Ofori Foster, Emmanuel Gyamfi, Sofada Kwabena, Emmanuel Narh Amanotey, John Appiah and Francisca Aikins like this.
Sep 25, 2021
Re: "I would like to know if 'pay it forward' [is] a loan or a donation?"
It's both a donation (from the funder's or funders' perspective)...
and a loan (from the recipient's/borrower's perspective).
In other words, it's a donation from the perspective of the person (or the people) who helped to fund the project, because the money doesn't get paid back to that person (or to those people).
And it's a loan from the perspective of the recipient (the borrower), because instead of the repayments going back to the person (or to the people) who helped to fund the project, the borrower repays in the form of "paying it forward" to help fund a project (or projects) for a borrower (or borrowers) on the platform.
The rest of your post has been answered in other threads in the Forum. (Please keep in mind that it's the Director who's in charge of setting credit limits and of all of the other policies on the platform.)
Notwithstanding the fact that I've written a lot more for you after this paragraph, the short answer is that because there have been too many defaulters (about 17% of loans), the cost of the loans has to be higher than we all would prefer, in order to keep the platform viable.
Credit limits are determined automatically according to algorithms programmed into the system by the Director, taking into consideration the borrower's repayment rate and other factors such as available funds on the platform at any given time (which is largely dependent upon each and every borrower always repaying each loan obligation here in a timely manner).
It isn't easy, especially in the time of a pandemic, I know, but unless wealthy philanthropists donate huge amounts of money to keep the platform going (or unless all of the ordinary lenders donate money every week or every month, all the time, which is very unlikely), then borrower performance is the only other thing that can keep Zidisha going.
Keep in mind, too, that even when wealthy philanthropists donate huge sums of money to the platform, as has happened from time to time, even that money eventually disappears if too much defaulting happens. And that's the problem...
We ordinary lenders make zero money here, and even when repayments have come back to us from the older (classic/traditional) loans, sometimes money has been lost when foreign-currency exchange rates haven't been in our favor. (Only the platform itself makes money, and a lot of the profits get reinvested back into the business to try to help new and existing borrowers.) We ordinary lenders have tried to help borrowers on the platform as best as we've been able to, with the lending models that the Director has provided as best as she could in the face of the challenges that have been caused by some of the borrowers who continue not to repay about 17% of loans on time or sometimes ever at all.
All I can say to borrowers is just to do the best that you can with the loans, as often as you can, because the better you can manage the loans, the better the platform would be able to help you and others in the future (for example, probably in the form of higher matching "PIF" deposits, higher credit limits more often, more flexible repayment terms more often, etc.).
About credit limits, I don't know if the policy still is in place that sometimes credit limits get lowered so that more borrowers would be able to request a loan than otherwise would be the case. It's a policy I've never agreed with because everyone wants to see their credit limit rise if they've maintained a good repayment rate (90%-100%). My personal view is that no one's credit limit ever should be reduced, but should remain the same (if the repayment rate has been under 90%) and always should at least remain the same or, preferably, increase by at least a little bit if the repayment rate is 90%-100%... and should increase by more, of course, whenever the borrower opts to deposit an additional "pay-it-forward" amount. (I do recognize, though, that the problem with that is that in order to do that, a smaller number of borrowers than otherwise would be the case would be able to request funding at any given time, as mentioned above.)
EDITED: The policy still seems to be in effect... I had missed this before... please see the Director's post here: www.zidisha.org/forum-threa... [forum-thread/11659]: "...the credit-limit progression in your 'Current Credit Limit' page is for illustration only and is subject to change...".
Common sense would tell us that a reason for maximizing the number of borrowers allowed to fundraise maybe is not just that "something is better than nothing" for borrowers who otherwise wouldn't be able to request a loan at a particular time, but maybe also is because each loan carries fees, so it's maybe a way of maximizing revenue, which isn't necessarily "bad" because a lot of that revenue helps to make even more loans possible in the future. However, I do think it's not a good practice because it makes it more difficult for entrepreneurs to project what they would be able to do with their next loan, not knowing for sure if it would be higher or at least the same as before, or if it would be lower... and also just because the assumption and idea in their minds, of course, is that their credit limit always would progress as long as they do their part by maintaining a 90%-100% on-time repayment rate... so, to see it get reduced--especially considering that the organization's name is "Zidisha" (which we know is Swahili for "to grow or expand")--probably lowers morale every time (and comments over the years do seem to suggest that that happens, which I think is perfectly understandable).
Maybe sometime the Director eventually would reconsider the policy of sometimes reducing the credit limit even for borrowers who have handled their loans very conscientiously (maintaining a 90%-100% repayment rate). Maybe all currently active borrowers and all borrowers who have defaulted (as this may be a reason why some decide not to repay) could be surveyed to see what the majority prefers? Would they prefer sometimes not to be able to request a loan at all, so that someone else with a better repayment rate could request a loan with the same or higher credit limit as before, or would they prefer for everyone's credit limit to be reduced so that more could request a loan at a particular time? I think it's not as easy a decision as it would seem...
[Edited on Sep 27, 2021]
Ofori Foster, Emmanuel Gyamfi and Dubick Akua like this.
Sep 27, 2021
Laurie thank you for the explanation but I will would like to ask you this question, since I joined zidisha community I and my friends have been funding ourselves no lenders has fund us so in this case the fund we has receiving comes from ours so with the pay it forward are we still receiving as a loan or donation since no lenders has fund us because our own money we repaid into the community is still rotation so what will you describe us we repaid much into the community but us or friends are saying we received small extra which we all know the pandemic at hands
Michael Boateng, Emmanuel Gyamfi, Sofada Kwabena, Emmanuel Narh Amanotey and Jonas Gagodo like this.
Sep 29, 2021
You're welcome for the explanation, of course.
In the past, some borrowers have expressed interest in being able to lend on the platform, too, and the Pay-It-Forward program gives borrowers that opportunity. And sometimes, yes, other borrowers are the only ones funding another borrower's project. I've noticed that, too. Julia (the Director) mentioned on Sep 22, 2021, that funding from lenders has been slower recently because "... autolending funds (which previously accounted for the majority of funding) are not yet being allocated to Pay It Forward projects, as we are giving everyone who might wish to opt out until October 1 to do so..." (www.zidisha.org/forum-threa... [forum-thread/11656]).
What that means is that some lenders who have set their accounts to automatically relend their repaid funds for them, instead of logging in themselves to relend those funds manually (which apparently accounts for most lenders here on the platform), may wish to log in to withdraw whatever repaid funds from the earlier Classic/Traditional loans that they made and from which they may receive funds back before October 1st. (They were sent an email informing them about the new Pay-It-Forward program.)
Also, I think that maybe part of the reason why the Pay-It-Forward program may have been created possibly could be so that borrowers maybe would be more likely to repay in a timely manner, because borrowers now also are relying on each other and not just on lenders from outside of Zidisha's borrower countries.
If this guess is correct, it's apparently working because Julia mentioned in her announcement about the new Pay-It-Forward lending model that repayment rates,
in fact, have been better under this new model than the most-recent interation of the previously mandatory and non-refundable Credit-Risk-Fee lending model: www.zidisha.org/forum-threa... [forum-thread/11618]:
"...We have spent the months since the [PIF] program was launched listening to lender and borrower feedback, and carefully monitoring performance data. The concept worked out better than we ever imagined. We observed early on that the majority of borrowers opted to raise Pay It Forward projects instead of traditional loans when given the choice, while new lenders were equally likely to fund both types of projects. Now we have enough data to compare the long-term repayment performance of both types of projects, and Pay It Forward is the clear winner. Not only are more Pay It Forward repaid on time, but Pay It Forward recipients are dramatically more likely to deposit an optional extra amount to fund new projects at the end of their repayment period (allowing us to grow and fund more entrepreneurs)..."
To answer your question about why the optional extra amount that some borrowers opt to deposit, in exchange for a higher credit limit, now apparently is being matched by Zidisha at a lower percentage than before, Julia also already has answered that question on Sep 9, 2021: www.zidisha.org/forum-threa... [forum-thread/11645]:
"...We increase or decrease the matching bonus from Zidisha from time to time depending on the availability of funds. In recent weeks, there has been a surge in repayments and extra Pay It Forward payments, such there are not enough funds to sustainably match everyone at 100%. The matching bonus rate has therefore been decreased to ensure that we have enough for everyone..."
Please keep in mind, Francisca (and others), that Julia (the Director) is who is in charge of everything here, so it's best to direct policy questions to her, since information directly from her would be the most accurate (this is because of policy changes that any one of us sometimes could have missed, but that she would know off the top of her head). Please understand, as well, that no one else has any power to change anything here on the platform, although certainly we all are welcome to provide her with feedback, via any of the communications options available for doing so. (Anytime anyone else answers questions, our answers are based on information that actually you also could have found yourself publicly on the platform or, in the case of some types of information, on the non-public portion of your Zidisha account.)
Sofada Kwabena likes this.
Emmanuel Narh Amanotey
Sep 29, 2021
Please is there a way zidisha team or director can reduce extra deposit amount we paid in addition to pay it forward since we the borrower's doesn't get any additional amount on what we repaid in these pandemic and director doesn't want to increase our credit limit
Mukichi Getrude and Sofada Kwabena like this.
Sep 30, 2021
Please read the last paragraph of my reply to Francisca, here:
Oct 10, 2021
Please is there not a way zidisha can double extra deposit pay it forward for us
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