How it works
Risk and Due Diligence
Deki cannot guarantee that you will have your loans repaid. However, we do try to minimise risk as much as we can.
As Deki is a new organisation it is difficult for us to estimate what the risk will be at this stage. However, in general micro finance has a repayment rate of over 95%.
Lending via Deki involves three levels of risk:
Our field partners screen every borrower posted onto our website. We aim to ensure that they are honourably borrowing and that they can feasibly manage the loan. There are however a number of reasons why a borrower may not be able to repay the loan:
- Health e.g HIV/AIDS, malaria
- Natural disasters e.g floods
- Business issues e.g crop failure
- Personal emergencies
- Other issues
Deki always gives the borrowers the chance to defer their payments if circumstances arise where they are unable to repay their loans in a particular month. The length of time that a loan can be deferred is at the discretion of our field partners.
The Field Partner:
Deki links up with field partners who administer the loans. It is the field partner’s responsibility to ensure all money is distributed and collected appropriately. Although Deki is very thorough in selecting field partners, there are a number of risks associated with using them as an intermediate.
- Economic: as Deki lends in local currency there is the risk of large currency devaluation. Deki will cover any minor fluctuations and at different times this could work for or against Deki. Any money made by Deki will be used to enable us to reach more borrowers. However, if there is a major loss due to currency fluctuation Deki may be forced to pass this on to the lender.
- Political: Deki plans to work on a global scale. From time to time areas we work in may become unstable and make it difficult for our field partners to work effectively.
Deki’s field partners are already well-established grassroots organisations who specialise in micro finance. They must have clear social objectives and a proven track record.
Where possible we ask our field partners to provide the following:
- Audited financial statements
- Agency ratings/evaluations
- Funder evaluations
- CVs, bios or resumes of key personnel
- Financial/portfolio reports
- Mix Market link (Mix Market provides data on MFI’s including outreach and impact data, financial data, audited financial statements and strategic/business plans
Data Verification Audit: so as to verify that loans actually reach the specified borrower and that all data is accurate, Deki will from time to time to commission certified local audit firms to randomly check several borrowers listed on the Deki website.
Bank Statement Reviews: From time to time Deki may monitor our field partners bank statements in order to verify the flow of funds match data entered onto the Deki database.
Diversify Your Portfolio
Deki and our field partners try to ensure that all borrowers posted onto the website are able to pay back their loans. As this is not guaranteed we suggested that you spread your loans across a number of borrowers, in doing so you are spreading your risk. For example if you are planning on lending £50, we recommend that you spread your risk by lending £10 to 5 different borrowers.