When a 500-acre tea estate went up for sale in Uganda, local farmers were able to buy it with the help of a Fairtrade lender.
But their crops were poor – they were producing just 40% of their potential – so they took out a second loan for fertiliser and the yields went up to 100% in a matter of months.
The Newcastle-based Shared Interest Society lent money to the Mpanga Growers Tea Factory Ltd that enabled it to buy the estate and the fertiliser. As a result, the farmers are paid more, the community is better off and the cooperative is ambitious to produce its own energy, either from a river running through the estate or from wind.
Tea is grown on the estate and by the farmers who own Mpanga, as outgrowers. Based in Kabarole in western Uganda and established in 1995, the coop sells its tea at auction and to Fairtrade buyers, including Cafe Direct. Mpanga's general manager, Rogers Siima, says: "Shared Interest has provided finance to Mpanga when most needed and when it is difficult to obtain financing from other lending institutions."
Research indicates that the world's 450 million smallholder farmers provide 70% of the world's food. However, only 2% of their financing needs are currently met and they feed some of the world's hungriest people.
But the Shared Interest society is trying to redress the balance and its success stories are numerous. In Chile, for example, farmer Joel Uribe is part of a beekeeping cooperative, Apicoop, which is expanding into fruit growing and selling to the cooperative, with financial backing from UK social investors through Shared Interest.
Apicoop has been borrowing from the Shared Interest society since 2002 and is the first Fairtrade producer of blueberries. It has been supplying honey through Fairtrade networks for at least 20 years and the success of Apicoop has enabled 1,000 children to be educated, including Joel Uribe's daughter, who graduated top of her class in medicine thanks to the financial support he received.
The Shared Interest society is the world's only 100% fair trade lender, its investments funding loans and other credit services to businesses in disadvantaged communities. It is owned and controlled by 8,800 members and each has an equal voice and vote, regardless of account size.
Last year, the organisation made payments of £46.9m, reaching 375 fair trade businesses, many of them in unstable parts of the world. Those businesses included 97 producer groups representing 155,443 individuals and 6,532 permanent employees, who collectively earned revenues of more than £236m.
Cesar Rivas Peña of Café Peru told the society: "Thanks to the way you scheduled our loan repayments, you have aided us with the liquidity needed to grow our business and increase sales volume. This allows us to pay a higher price to producers than they can access locally, and positively influences quality of life."
The society was established to provide capital at fair rates to enable Fairtrade businesses to develop, grow and thrive. Its finance supports entire supply chains, helping groups pre-finance orders, buy materials, new buildings and machinery, and to develop their own communities.
To qualify for financial support, businesses must either be registered with Fairtrade (labelling organisations) International (FLO) or be members of the World Fair Trade Organisation (WFTO). They range from sole trader handcraft producers to large scale coffee cooperatives.
The lending is largely unsecured because many customers have nothing to pledge, or have already used their assets for conventional borrowing. By pooling investments, the society can use the money over and over again. Its financial model is triangular so there is a flow of funds between Shared Interest, Fairtrade producers and buyers.
Essentially, it provides the link between UK social investors and Fairtrade organisations needing finance to improve their livelihoods so they can trade themselves out of poverty.
A team of 34 people works mainly in Newcastle as well as Kenya, Ghana, Costa Rica and Peru. The society relies on partnerships with fair trade networks, Coops UK and Fairtrade Africa.
In 2013, the society increased its membership and share capital through sustained marketing with the Big Issue and Café Direct. It developed a network of 138 volunteers who gave 250 hours to promote the society.
It has coordinated an international social lenders group to improve impact assessment and reporting, and to spread best practice. In January 2014, investment was the highest ever, 120% higher than 2013. Profit after tax and share interest was also 38% higher during the year.
The Guardian judges admired the fact that the society was a mutual organisation rather than a business, commenting: "Its name exactly expresses what it's trying to achieve – and all this in a market with strong, dominant players."
Jackie Wills is part of the wordworks network
The Guardian Sustainable Business Sustainability Case Studies contain articles on all the initiatives that met the criteria for the GSB Awards.
