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Why I Founded Zidisha

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It was Thanksgiving Day, 2008 and I was in Niger, a vast famine-stricken wasteland in the middle of the African continent.

An idealistic twenty-four-year-old, I'd been hired out of graduate school to manage overseas grants on behalf of the US government. This was my second year on the job and I already had a reputation as a maverick. Much to the discomfort of my colleagues, I refused to stay at the expensive hotel normally reserved for US government visitors and settled instead on a cheap hostel. The hotel cost more per day than many Nigeriens earned in a year, and I couldn't stand the disparity.

I made a holiday phone call to my parents in America, and we exchanged the usual Thanksgiving banter about turkey and second pieces of pie. Then I went out to the marketplace to buy dinner. I ordered a Nigerien staple - a big bowl of millet porridge with sauce made from baobab leaves - for about ten cents and waited my turn for a spoon.

By that time, I was surrounded by kids, some as young as three years old, barefoot and jostling each other to get closer to me. I assumed they were just curious to see a foreigner, and finished my bowl of porridge as best I could under their stares. But they had more at stake than curiosity. When I set the bowl back on the table, the largest of them, a wiry six-year-old, pounced on it and polished off the leftovers, while the others looked on hungrily. These children were locked already in a grim contest for survival.

They were so close. I wanted to open my backpack and give them everything I had, buy them all bowls of porridge, or better yet invite them into my parents' comfortable suburban home in America and let them feast on turkey and stuffing and candied yams. As if sensing my thought, my tiny observers crowded closer, and more and more joined them, hoping for a handout. Some were no higher than my knee but already had a hard, vacant look in their eyes. How to help them?

Years of working with NGOs and government aid programs were convincing me that handouts are a dead end, temporarily soothing the acuteness of the injustice but taking donor and recipient down a path of dependence that ultimately makes the international wealth divide even wider.

I had also been working with microfinance - small amounts given not as handouts but as loans to invest in revenue-generating activities - and while in graduate school helped found the first microfinance organization to be funded exclusively by capital raised over the internet. This organization, a nonprofit based in Senegal, ended up raising hundreds of microloans through Kiva at zero cost. In order to manage the loans we opened an office, hired a loan officer - and saw our overhead costs shoot up to more than a third of the value of the loans we were making. The interest we would have had to charge to cover our costs was high enough to wipe out the borrowers' profits, defeating the purpose entirely. This is the story of traditional microfinance the world over: the average interest rate charged by organizations that raise zero-cost capital through Kiva is 35%.

But by 2008 something new was happening: the internet was making inroads in the world's poorest places, and ordinary people there were going online. Cheap cybercafes appeared on every corner, offering an hour of browsing for the price of a banana. The early adopters were young adults in urban centers, whose incomes were as meager as previous generations, but unlike their parents were avid users of Facebook and Yahoo. They were using the internet to connect with friends and family elsewhere in the country and even overseas. Back at my old microfinance organization in Senegal, the younger entrepreneurs no longer needed a loan officer to interact with Kiva lenders on their behalf.

Could this new connectivity be leveraged to produce more radical change? The internet was making geography irrelevant for a rapidly increasing percentage of the world's population. Why not use it to make geography irrelevant for those who have been most handicapped by geography, who happen to have been born in the parts of the world that are forgotten and desperate, whose life expectancy is less than forty years because they are located in Haiti or Mali instead of Japan or Norway, who drop out of school at age thirteen and spend their days laboring to put food on the table?

The international wealth divide runs deep, even in my own family. Having been born in America, I had the best education handed to me without any particular effort on my part. My husband had the luck to be born in Indonesia, where he spent his childhood selling used newspapers in the streets and bringing the pennies he earned home to his mother. College was out of the question, even though he was at the head of his class and passionate about reading and learning. This kind of injustice has been with us for all of human history. We assume it is unsolvable.

But with the internet making geographic barriers irrelevant, is that assumption still true? Can the digital revolution be used to overcome the geographic handicap, so that someone who happens to be born in Niger or Indonesia or Kenya or Burkina Faso has the same chance to succeed as someone born in a wealthy country? Can the internet be used to make geography irrelevant and bring those hungry kids in Niger right into the living room of my family's home in America?

People told me this ambition was too high, too optimistic. The disparity between rich and poor countries is so vast as to be insurmountable. The world has always been this way and always will be, they said. I don't believe it.

The history of technological change follows a common pattern: the diffusion of new technology produces a sudden shift in what is possible, but our habits and assumptions change much more slowly. I believe we are at that point now, where the advance of the internet has made this vast geographical disparity in wealth no longer necessary - but we have not yet grasped this sea change and adjusted our ways of doing things to encompass it.

Zidisha was founded to see how far this idea of using the internet to make geography irrelevant can go. We use technology to connect internet-capable young adults in the world's poorest places with a global market for person-to-person loans - an eBay-style marketplace where borrowers transact directly with lenders and raise the funding they need to grow their small businesses, limited only by their own track record of responsible repayment. Since we do not outsource loan management to local banks, the cost to borrowers is far lower than what has traditionally been possible for traditional microfinance. As a result, living in an unlucky part of the world need no longer put a ceiling on our members' ambitions. They can connect to Zidisha regardless, using technology to bypass hitherto insurmountable local obstacles.

Zidisha is pioneering something radically new, continuously learning and adapting our model as we gain experience. Our community is the work of hundreds of volunteers and thousands of lenders and borrowers in every continent, who are fed up with a world that shuts people out of opportunity because of their location. We've many transformed many thousands of lives through the opportunities created by connecting people to people.

Just as importantly, we're proving that it is possible to use technology to bridge the international wealth divide - slowly undermining the paradigm that allocates people in developing countries to an unreachable place. The intent is that others will seize on this possibility and build on our work. To facilitate that, we have made our website code open source, so that anyone may copy and adapt it.

For the first time in history, we have the technological tools to make geographic barriers irrelevant. Poverty and lack of opportunity arising from geographic location is no longer necessary or tolerable. We can connect people across the international wealth divide, and the world will never be the same.

Julia Kurnia is the founder of Zidisha, an online community that enables direct person-to-person lending to entrepreneurs in developing countries.