SI AnnRev2021 web - Flipbook - Page 17
SHARED INTEREST SOCIETY ANNUAL REVIEW 2021 17
OUR LENDING
Access to finance remains a significant
challenge for businesses in developing
countries. With our support, we know that
these enterprises can generate sustainable
economic growth.
Our key focus is to provide finance directly
to smaller, vulnerable organisations, who
often have no other affordable source of
funds. We do this by offering finance in
two ways: directly to producer groups
that follow Fair Trade Principles and to fair
trade wholesalers, FLO Traders* and retail
businesses. This year, our finance supported
200 customers, consisting of 175 producer
groups and 25 buyers.
The majority of our support is in the form
of working capital or stock facilities to help
producers fulfil orders, pay workers on time
or purchase stock. In addition to this, we
offer term loans to producers to enable them
to purchase equipment and infrastructure.
We are also one of the few social lenders to
provide credit facilities to buyer organisations
in the Northern Hemisphere. Most of these
funds are used to pre-finance orders so
they can make a payment to the producer
when placing an order. This is helpful when
the delivery of goods may not take place for
several months, or if the products need to be
processed or packed before being sold. Of
the total payments made on behalf of buyer
customers, a large proportion (38%) went
to Asia and the Middle East. Due to political
and economic constraints, it is difficult to
lend directly in these regions, therefore our
relationships with buyers are essential in
reaching disadvantaged communities here.
In 2021, our finance supported 374,249
farmers and artisans. From this year’s
overall figure, 33% are women and 8,262
are permanent employees. According to
Fairtrade International, women represented
17% of Fairtrade farmer members and 41%
of Fairtrade workers in 2020 but based
on our data, approximately 50% of our
customers’ employees are women.
In terms of lending products, coffee remains
our largest focus, mainly due to the scale
of Fairtrade coffee production, with more
than half of all Fairtrade certified producers
growing this commodity. Although the total
lending for coffee has increased in 2021 in
value terms, the overall percentage remains
the same as we have increased our Share
Capital over the year.
We have also seen a considerable increase
in cocoa lending in 2021 compared to
2020, with it now representing 28.3% of our
lending portfolio (previously 19.8%). This
relates to an increase in supply coupled with
growing demand, following the purchasing
delays experienced in 2020.
Handcraft and textile products continue
to have an important place in our portfolio
as we maintain our focus on small and
disadvantaged producer groups. We believe
this is vital because the majority of other
social lenders do not offer financing to this
sector. Our lending to these producers did
decrease from 11% in 2020 to 8% in 2021,
due to a reduction in orders following the
outbreak of Covid-19.
*FLO Trader describes a trading organisation that buys, sells and/or manufactures/processes and has a Fairtrade product certification.