New member fees no longer need to be prepaid

Discussion in 'Announcements' started by Julia Kurnia, Apr 8, 2015.

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  1. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Going forward, first-time Zidisha borrowers no longer need to deposit the lifetime membership fee payment before receiving their first loan. Instead, the fee will be deducted from their first loan disbursement.

    In most countries, borrowers must make a deposit into a loan loss reserve fund before receiving their first loan. (This is a one-time fee, and covers lifetime Zidisha membership.) One month ago, we began asking first-time borrowers to pay the membership fee before receiving their first loan, instead of deducting it as we had done previously.

    Since we began requiring prepayment of the membership fee, 909 new members have raised their first loans, been fully funded and been invoiced for the membership fee. Of these, only 205 have sent payment. The rest have either had their loans expired and returned to lenders (after the two-week deadline to make payment passed), or will soon.

    Per borrower feedback, some are unwilling to prepay because they fear Zidisha is an internet scam. We knew this would be a problem to some extent, but didn't expect such a large majority would fail to prepay. More concerning is the feedback that some prospective applicants do not have the cash to pay the fee. Whenever possible, we want to avoid imposing requirements that block otherwise worthy applicants from joining us.

    It might be worth such a drastic reduction in successful loan disbursement if requiring prepayment improved repayment rates substantially. That doesn't seem to be the case so far though; of the 35 repayments that have fallen due for the borrowers who prepaid the membership fee, 87% were paid on time - that's not much different from our historical average. Though the data set is not large, it is not likely enough that the large-scale trend would be substantially different to be worth continuing the experiment.

    In addition to the hope that requiring prepayment of the membership fee would improve repayment performance, another purpose of asking new members to prepay the membership fee was to make certain that they understood and agreed to it. To help ensure consent going forward, new members will be required to explicitly confirm consent to have the fee deducted from their first loan, by checking a box once when they initially apply to join Zidisha, again when they post the first loan application, and once again when they confirm acceptance of the loan in the website after it has been funded.
     
    Last edited: Apr 8, 2015
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  2. Dickson Mutashe

    Dickson Mutashe Silver Member Volunteer Mentor

    Well, actually that is some very good news . I have hard so many phone calls about the same. Actually many called it names and swore never to sent any money...which from your findings is true they chose to forget about it or call it another good dream. Otherwise we look forward to more loans being accepted now.
     
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  3. Jean Wendpanga

    Jean Wendpanga Gold Member Volunteer Mentor

    good news Julia. I was waiting for this news for a few days because the first day of changes I have always contradicted the payment of membership fees in advance. Thanks

    KABORE
    Zidisha VM in Burkina Faso
     
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  4. Thank you Julia, this is a relief because many have started seeing Zidisha as a pyramid scheme, it is very hard to convince anyone in Kenya to send money first before receiving a service due to many times we have been swindled money. Otherwise we look forward for more new applicants and funding as well.

    JOEL
    Zidisha VM in Thika Kenya
     
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  5. SusanF

    SusanF Silver Member

    This new policy makes sense. The last time I took a loan out secured by my home, the loan fees were deducted from the loaned amount. This is the usual practice. If you need to borrow money typically you don't have a lot of money already, right? If you have lots of money why would you be borrowing it?
     
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  6. kbmkev

    kbmkev Forum Member

    Thank you Julia this has come as goodnews to new members, You should also try to improve on the side of the invites as many people are willing to join but the invites chance are only limited to few (three people)

    Kelvin
    Zidisha VM in Gatundu
     
  7. Oscar Alochi

    Oscar Alochi Gold Member Volunteer Mentor

    Thanks @Julia Kurnia thats Great New for most Borrowers keep the Good work.
     
  8. john otieno akello

    john otieno akello Gold Member Volunteer Mentor

    I dont understand how a serious entrepreneur,would lack 3000 membership fee.I believe these is step in wrong direction. I suggest borrowers pay 1000 membership fee upfront and 2000 deducted from the loan. #justthinking
     
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  9. Roy

    Roy Gold Member

    And good thinking it is John. I have two issue, which I would like to raise in response.
    1. It seems not all borrowers are entrepreneurs....At least it is not apparent from loan applications. I recall one where a father was borrowing money for his daughters education. So the question therefore arises: is it intended that they are entrepreneurs? I do not expect so.
    2. To have too many changes over a short period is not good. Even the brightest of us get confused, and the organisation's systems do not function as they should. This does not mean that ideas, such as this, that are put forward should not be adopted. Rather management needs to balance it with other considerations.
     
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  10. julidaze

    julidaze Silver Member

    Thank you Julia for the updates on the one-time payment
     
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  11. Margaret Julliet

    Margaret Julliet Gold Member

    Thanks Julia for this move. It is the greatest news at Zidisha. I am a new VM and I was already facing a had time to convince my mentees that Zidisha is the place to be for ones growth in business. I am sure my mentees will receive this info with joy.
     
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  12. Freddie85

    Freddie85 Forum Member Volunteer Mentor

    This a good resolution a relieve to most adamant Kenyans who have fallen prey to pyramid schemes and other scams. I am sure the new members list will now shoot because of this positive changes. Thank you Julia and Zidisha Team

    Fredrick
    Zidisha V.M in Thika - Kenya
     
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  13. Oscar Alochi

    Oscar Alochi Gold Member Volunteer Mentor

    Great work
     
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  14. Festus Rop

    Festus Rop Forum Member

    Great work!! #Julia towards extending Zidisha services to all.....However I suggest Zidisha puts in place another brilliant way of determining project validity and repayment probability of a given loanee.
    This will greatly aid in evading possible furture loss as a result of default repayment of a loan.

    Good day zidisha community and thanks to all my lenders for funding my project God bless you.
     
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  15. tony

    tony Gold Member Volunteer Mentor

    that's good news, especially for applicants that were receiving about ksh 4,500 - 3,000. i can't imagine of a business that I would inject KES 1,500 and make enough profits to pay the loan plus the cost.
     
  16. Justus auka

    Justus auka Forum Member

    Those are good news for those of us who wanted to bring more friends to the zidisha community but were barred by the new membership fee rules. I think you have made a key step in opening access to loans to even those whose minds are corrupted that zidisha is a scam platform. Thanks the Zidisha community.
     
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  17. Oscar Alochi

    Oscar Alochi Gold Member Volunteer Mentor

    @Roy thanks for shading light on this issues @john otieno akello as Roy has said not all borrower on Zidisha Platform are Entrepreneurs,Every individual as his own special need that makes he/she to apply for loan,we need to understand that unless this platform was purely meant for Business purpose which i know is not the fact but the main reason was to improve the lives of ordinary people through soft loan to carter for their needs.
     
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  18. Peter Rutere

    Peter Rutere Forum Member

    Thank you Julia for the update
     
  19. LYDIA CHEPKORIR

    LYDIA CHEPKORIR Silver Member

    What about the 50% repayment rule. Was it ammended too? I repaid my loan in installments of less than 50% and still could not get a credit limit increase despite posting a 100% on time repayment record https://www.zidisha.org/loan/11455#comment-tips
     
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  20. Oscar Alochi

    Oscar Alochi Gold Member Volunteer Mentor

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