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Co-operatives of coffee growers in Mexico, small
exporters in India, juteworkers in Bangladesh and
beekeepers in Tabora have a lot to worry them. Many
of the coffee growers have become refugees from
paramilitary violence. Many of the export producers
have suffered in a cyclone. But one worry has
ended. They can now get an advance to pay for their
work as soon as they book an order.
Shared Interest invests its members’ savings in
this sort of finance for people who have orders
from fair-trade organisations but lack the
collateral to borrow from a commercial bank to
fulfil them. When the buyers receive and pay for
the goods, Shared Interest gets its money back.
It is now becoming a clearing house for producer
groups and buyers who are members of the
International Federation for Alternative Trade.
Instead of financing every order individually, it
will make producers a monthly advance on all the
new orders they have received from buyers in the
IFAT pool. This system requires that producers do
good work and that buyers do not reject it.
Shared Interest pays its members, scattered
around Britain, a modest rate of interest (4 per
cent below Base rate). Any profit goes, at present,
to building up reserves. Shared Interest has had to
overcome two trading problems. It had to take over
a fair trade buyer which ran into difficulties. It
also made a loss on coffee.
Fair
trade prices are normally above market prices. But
when the market price for coffee shoots up, growers
can be tempted to sell to commercial buyers rather
than fulfil fair-trade orders.
The number of Shared Interest members reached
8,315 in September 1998 and the sum they have
invested passed £17 million.
One limitation of Shared Interest finance is
that it is for producers of goods for export. It is
the sale of these goods for hard currency which
gives Shared Interest its money back. However, it
has also raised £2 million, interest-free.
Through the Ecumenical Development Co-operative
Society, this finances microcredit loans to small
traders whatever business they are engaged in.
Essentially, Shared Interest has tapped a new
source of funds for overseas development, UK
savers. If Shared Interest members can get their
money back when they need it, they can invest sums
they wouldn’t simply give away. And because they
are not seeking the maximum commercial gain on
their money, they can lend it to people they want
to help. Since Shared Interest’s reserves cannot be
paid out to investors, they will also not be
tempted to turn their stakes into cash by selling
the society to a takeover bidder.
Mark Hayes, Shared Interest’s founder, spent
years pondering how best to mobilise savings in
support of worthwhile enterprises which weren’t
going to make a quick fortune and couldn’t borrow
from banks. After leaving Cambridge, he joined
Investors in Industry which did this sort of job.
While banks lent against collateral, 3i lent in
exchange for a share of the company. Those who
didn’t want to give up a share of their company
couldn’t borrow to develop it.
Then in 1984 he came across Traidcraft which
raised money by selling non-voting shares and used
the spending power of ordinary Britons to create
jobs for some of the world’s poorest people. It set
him thinking about voluntary associations which
would see investment as a relationship between
people rather than a chance to make some money.
Shared Interest, which he set up in 1990, is an
association of this type. It is a co-operative
lending society in which every member/shareholder
has a vote. It exists to provide a service and set
up successful relationships. Profits enable it to
take on new risks rather than reward its
members.
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