Prosocial Crowdlending in Kenya

Abstract

The crowdfunding industry has emerged in the past few years as one of the most promising alternative financing options. Lending and donating operations accounted for 81% of the crowdfunding industry's $34.4 billion total funding volume in 2015.

Kiva Zip, a prosocial program, created an online platform that provides 0% interest peer-to-peer loans and has features in common with lending and donating crowdfunding platforms. This program is a spin-off of Kiva. Although both platforms have a similar objective and modus operandi, they differ primarily because Kiva has a figure called a field partner, who is the intermediary between borrowers and lenders, while Kiva Zip has no field partners but does have so-called trustees, who provide support to borrowers but do not act as intermediaries for resources or charge for their services.

The authors thoroughly analyzed Kiva Zip's operations in Kenya for the years from 2011 to 2015. Kiva Zip has stopped posting new campaigns in Kenya but has continued to collect payment for previously delivered loans. We studied in detail the impact that lenders, borrowers and trustees had on the platform's performance. In addition, we analyzed the different stages of a campaign on Kiva Zip: when a campaign is posted, when it is funded and when the loan is paid back.

Keywords: Crowdfunding; Crowdlending; peer-to-peer; Kenya; Africa; Funding; Entrepreneurship

JEL Classification: M1