The Worldaware Award for Financial Innovation
The Winner: Triodos Bank
Alto, a 50-year-old Ugandan, had not been able to borrow any money anywhere until he received a £60 loan from Cerudeb, the Centenary Rural Development Bank. With this, and £60 from his own savings, he bought a sewing machine. He uses his machine to repair shoes and make new ones. In nine months, his income has risen from £1-£2 a day to £3.
Cerudeb lends to about 80,000 tiny enterprises run by poor Ugandans. Triodos Bank, supported by savers in Britain and the Low Countries, provides finance for Cerudeb.
The name Triodos comes from the Greek and reflects the bank's aim of achieving threefold benefits - cultural, social and economic - through its activities. It was established in 1980 in the Netherlands and opened an office in the United Kingdom in 1995. It invests in socially useful enterprises while still paying savers a competitive rate of interest on their money.
These enterprises include 'banks for the poor' overseas such as Cerudeb (see above), Agashani Credit and The Start-Up Fund in South Africa, FACACH in Honduras, Asociation Andar in Costa Rica. There are also coffee growers groups in Tanzania and a Peruvian organisation, Allpa, which finances and buys goods for export from small-scale producers. The criteria on which the bank decides which organisations to back include how well administered they are and whether they attract local savings. Bank staff visit borrowers before investing in them and make further visits every year.
The aim is that borrowers should become strong enough to attract commercial investment and become banks in their own right. The Kenya Rural Enterprise Programme, founded in 1984, has raised £5 million in share capital and become the first microcredit bank in Kenya. In Britain, the Triodos Bank's North.South Plan has raised £5 million specifically to finance microcredit lending in developing countries. It is the first UK savings bank account to do this.
Interest rates for savers range from 3 per cent on £300 withdrawable at 33 days' notice to 5.75 per cent on £100,000 at 90 days' notice. Savers can, if they wish, give their interest to fund training and help for borrowers.
Triodos Bank, Brunel House, 11 The Promenade, Clifton, Bristol BS8 3NN
Tel: 0117 973 9339 Fax: 0117 973 9303