klunpa01    Dec 28, 2013

Dear James,

I am so sorry I did not respond with a link in regards to your question! The new tiered loan structure is available for public view under the "Borrow" section of our website. Please see the direct link below:

www.zidisha.org/microfinanc...

My apologies of the emotional equity that was lost in Mr. Dieme's loan. There is no way for our verification processors as well as those in country to predict what can cause a business like his own to fail. An entrepreneur can wake up one day and everything is fine with his chicks, and the next day a disease can come through, wiping out the lot of his time and investment.

The reality of lending to economically marginalized individuals without salaried jobs, insurance or government-provided social safety nets is that very frequently, the borrowers will suffer financial setbacks that make it impossible to make substantial loan repayment installments every month of the year. Traditional microfinance organizations often use methods that border on abusive to ensure that the repayments are made every month regardless. As a result, microfinance clients often resort to borrowing elsewhere or forgoing spending for necessities like decent food and school tuition in order to make loan repayments.

At Zidisha, we do not use abusive or unethical collection methods, and we also recognize the reality that we are lending to economically vulnerable people who lack the safety nets - health insurance, monthly salaries, savings, government services, etc. - that most of us take for granted.

Please let me know if there is any other assistance I can provide.

Sincerely,
Paige
Senegal Liaison Intern

• McDermotts    Dec 30, 2013

  Hi Paige, I am glad that Zidisha doesn't practice draconian techniques in attempting to recover debt, this would be contrary to my principles and to those of the site. I was unaware of the suggestion that, "Traditional microfinance organizations often use methods that border on abusive to ensure that the repayments are made every month regardless". Is this the source of their significantly better collection rates? I, for one, would not want to be supporting an organisation without ethics and would be happy to have slightly poorer collection rates than have people seek alternative loans and choose unnecessary hardship to repay the Zidisha loan.
  
  The key for me, and possibly the other supporters on this thread, was a statement you made in an email to me personally. I shall repeat it here:
  
  "With that said, yes, Bassari was responsible for the verification process with Mr. Diame. Upon verification, questions such as whether or not the person was seen as a person of integrity and was a respected member of the community were answered. Bassari identified two others who were telephoned in this process who accounted for Mr. Diame as well as it was verified that he had previous credit history with a local lender, that was verified and was fully remitted before his Zidisha loan. The verification process has never been to verify a person has a stable business so it opened up opportunities for those who have not yet had a chance to have a business to have viable incomes to support their family."
  
  So my error was to assume that the verification process was verifying that the business referred to in the background text had been evaluated. I am not so niaive as to believe that only loans are made to owners of successful businesses but I do feel a little disappointed that when a successful business is presented as part of the justification for the faith in Mr Diame as a credible debtor, we then find immediately after the loan is made that this business fails. Please rest assured that I believe this could be just chance and in any event it is a tragedy for Mr Diame and his family but it does strike me as a little concerning. I mean that if I were evaluating a potential debtor myself, I would ensure that any existing business venture was at least stable before I rated them as a credible investment for our funds. I am not saying you need to have a business to have a loan, I am saying that if you have a business it should at least be stable and not be about to fold.
  
  I have reviewed the link you gave me to the tiered loan structure, thank you. It is a fantastic idea and will minimise the potential for loss in the future. The greatest sadness for me is that the funds that were lost on Mr Diame could have supported another credible source and helped an entrepreneur somewhere in the world to help themselves.
  
  Kind regards
  James

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McDermotts    Dec 4, 2013

An update on my communications regarding this loan:
________________________________________________

Dear Paige

Thank you for your email in response to my enquiry. I think there has been a misunderstanding. I have not received any report from Bassari Consulting, it was my understanding that they carried out the due diligence on Mr Diame and his business prior to the listing on Zidisha. I only have the information available to me from the website. You state precisely the figures that are at the heart of my concern. It seems that Mr Diame was running a successful business, routinely discharging liabilities around $600 per month. Is this true? It was certainly stated on the loan details and, if my understanding is correct, it was verified by Bassari Consulting. If this is the case then there are questions to be answered about the verification process. Immediately after the loan of $500 from Zidisha, for the capital purchase of telecoms equipment for sale, we are to believe that the conditions changed so dramatically that this business failed.

I also agree that we invest "emotional equity" along with cash but let me be clear my emotions in this case are, sadness for Mr Diame and his family at the loss of the business but this is then followed with frustration at the verification process from Zidisha that allowed us to lend money to a what now appears to have been a failing business.

You mention a new tiered loan structure, would you provide a link to where this is described.

Thank you

Kind regards

James

Sent from my iPad

On 4 Dec 2013, at 01:12, Zidisha Service wrote:

Dear James,

My name is Paige, and I am Senegal Liaison Intern. Thank you for your email and also for your involvement. I am sorry this loan is a disappointment to you and to us as well. I have checked into his account and read the thread of notes left by the arrears team. We have been very active in corresponding with him about this. The first reminder was sent on 6/18/13 and there have been many more, the latest just last week They have now involved his recommending official who has agreed to intervene. Unfortunately, it appears that Alioune's first business, the cell phone business has failed. As per my investigation of his profile, his monthly rent was not a great deal lower than the value of the loan. The rent he pays is 200,000 XOF which is about $430 and he said he has other incidental operating expenses which totaled at 75,000 XOFar, which is a little more than $150. This totals to a lot more than the value of his loan. Could you please send me the investigation that was sent to you by Bassari Consulting Management? I would like to further investigate into the report personally.

As a lender, you absolutely have the right to post whatever comments you feel are justified. I will note however, that due to Zidisha's new tiered loan structure, it is doubtful that he will ever qualify for a second loan. I am sorry. I am a lender myself and I understand the kind of emotional equity that we invest along with cash. It is truly disappointing when the follow-through does not match the promises. I hope this turns around. Feel free to contact us again.

Sincerely,
Paige

On Monday, December 2, 2013, James McDermott wrote:
Dear Mr Thakkar

My primary concern is not not the repayment of the loan, although this would allow me to continue investing in other causes. My primary concern is the quality of any due diligence. If we are to believe the Bassari Management review, then this loan was less than the monthly rent on Mr. Diame's business. I have two key questions

1) how did a successful, recently reviewed, mobile phone business suddenly turn from success to existential failure just after the Zidisha loan was approved.
2) if the loan was used as capital to purchase equipment, where did the equipment go?

The failure rate on Zidisha loans is significantly greater than other micro finance sites, I am beginning to get an incline into why.

I look forward to hearing your thoughts

Kind regards

James McDermott

Sent from my iPad

On 30 Nov 2013, at 09:12, Zidisha Service wrote:

Dear Mr. McDermott,

Thank you for your email.

I sincerely apologize for the inconvenience this delay in repayment by Mr. Diame has caused you and several others lenders. I understand that Mr. Samba from Bassari Management Consulting contacted Mr. Diame last in early November. He indicated that Mr. Diame went bankrupt on his first business, upon which he started his chickens business. He also indicated that he would pay sometime in mid-November, which I see he hasn't.

Let me assure you that we are doing our best to reach out to him and learn about his current status in repaying the loan. We will let you know as soon as we have more information on him.

Thank you so much for your patience and support.

Best,
Day Thakkar
Zidisha Team


On Thu, Nov 28, 2013 at 10:57 AM, James McDermott wrote:
Please see:

www.zidisha.org/microfinanc...

The excuses provided simply don't add up. What will Zidisha do to investigate this?

Kind regards

Mr J McDermott

keagan    Sep 14, 2013

I too have learned a lesson not to lend to those who have no previous repayment history. I do hope Mr Diame is able to repay his lenders via funds from his chicken business.

McDermotts    Sep 11, 2013

The following is the response I received today from Bassari Management Consulting:

Dear James
I wrote a note in zidisha website, Mr Diame said that these activities go down, he went bankrupt in these business. he has rerunning these business in selling chickens. I tried to reach him today but I couldn't join him, I'll call back him after.
Thanks

_______________________________________________________________

Whilst I extend my sympathies to Mr Diame for the loss of his business I must also state that there are some questions to be answered. His successful established business appeared to be making significantly more than this loan amount and so would have provided collateral should there be a problem with this venture. Also the equipment itself could have been sold to repay the loan. I think it is imperative that Zidisha and/or Bassari Management Consulting explain the deficiencies in the original evaluation of this prospect as a suitable creditor for this website. I look forward to hearing from either party.

• jammytylee    Sep 11, 2013

  Thanks for taking your time to contact Bassari James.
  Lesson learned, I will not lend to someone who has never repaid a Zidisha loan.

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McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:
On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:
On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:

On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:

On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:
On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:

On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:
On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

McDermotts    Sep 11, 2013

I have tried contacting Mr Diame's sponsor. I shall post any response:

Sent another response to this message today:

On 7 Aug 2013, at 11:14, [email protected] wrote:
Dear James
Sorry for this time to answer, I will do research and will come to you next week.
Thanks

jammytylee    Jul 27, 2013

Hi Mr. Diame, we haven't heard from you for a while. I understand some lenders have been thinking about what's going on your end since the first 2 payments have been missed. Based on my understanding your plan was to use the loan to make more profits. As a lender it would be much appreciated if you can let us know how things are going on your end and if everything is on the right track. Cheers!

• McDermotts    Jul 29, 2013

  I second Mr Tylee's commets. It would be beneficial if you could explain the delay in the repayments. I too hope that all is well and you get your repayments back on schedule soon. Best wishes. J McDermott

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• McDermotts    Sep 11, 2013

  I have tried contacting Mr Diame's sponsor. I shall post any response:
  
  Sent another response to this message today:
  
  On 7 Aug 2013, at 11:14, [email protected] wrote:
  Dear James
  Sorry for this time to answer, I will do research and will come to you next week.
  Thanks

  Log in to reply • Share
• McDermotts    Sep 11, 2013

  I have tried contacting Mr Diame's sponsor. I shall post any response:
  
  Sent another response to this message today:
  
  On 7 Aug 2013, at 11:14, [email protected] wrote:
  Dear James
  Sorry for this time to answer, I will do research and will come to you next week.
  Thanks

  Log in to reply • Share
• McDermotts    Sep 11, 2013

  I have tried contacting Mr Diame's sponsor. I shall post any response:
  
  Sent another response to this message today:
  
  On 7 Aug 2013, at 11:14, [email protected] wrote:
  Dear James
  Sorry for this time to answer, I will do research and will come to you next week.
  Thanks

  Log in to reply • Share

russell    Jul 27, 2013

Hi you have now missed your first 2 payments with no explanation at all.Do you think this is ok?

jammytylee    Feb 24, 2013

I like how this applicant clearly stated how the loan is going to be used and how it will get repaid. So now the only question is how good Mr. Diame is with his business.
I will complete this loan with a rate higher than I personally would like as I am still not sure of Mr. Diame's track record... but I hope if this venture works out there will be more and more bigger ventures... and count me in for the future ventures!

Good luck!

McDermotts    Feb 17, 2013

One thing I like about this proposal is that it is sensible. It will yield only sufficient profit to cover half of one month's operating expenses, implying Mr Diame is not over stretching - this is just a small part of his general business activities. The venture yields a target 40% gross margin. If it is a success I sincerely hope he will be able to grow the business by trying the same venture on a slightly larger scale. Good luck.