What are TradeRelief’s key aims?
Is TradeRelief a microfinance institution (MFI)?
Why is TradeRelief an efficient use of charitable donations?
Do you offer loans or equity investments? What rate of return do you seek?
What type of enterprises qualify for TradeRelief’s support?
Who are the trustees, partners and volunteers of TradeRelief?
Where can I find TradeRelief’s annual returns and regulatory submissions?
Do you have any links to resources and studies supporting TradeRelief’s approach to development?
What are TradeRelief’s key aims?
TradeRelief’s aims are to:
- seek out and invest in small and growing businesses that show potential to make a real difference in their community.
- build connections between charitable donors and enterprises that can drive sustainable social and economic change in developing countries.
- gather, analyse and communicate business information – initially to help fund the enterprises and later to measure and communicate the benefits returned to the community.
- arrange partnerships with other businesses and mentors to ensure that support is in place to stimulate successful social and economic development.
Is TradeRelief a microfinance institution (MFI)?
Though there are many forms of microcredit programme, TradeRelief does not adhere to the usual model of microcredit. Microcredit – particularly in the last decade – has focused on ensuring high repayment rates to demonstrate the MFI’s financial sustainability. The ‘effectiveness’ of microcredit tends to be measured by repayment rates, hiding complex problems that sometimes underlie these high repayment rates. TradeRelief puts the focus firmly back on the entrepreneur’s business and its social impact. We measure the business’ cash flow, the jobs created and the salaries paid. We monitor the role of each of our businesses in the community, and pick the best business ideas on the basis of their capacity to deliver change to peoples’ lives even if it might mean sometimes taking a bigger financial risk.
Why is TradeRelief an efficient use of charitable donations?
The impact that donations to micro-enterprises have is multiplied by the range of benefits transferred to the wider community and by the recycling of funds. Investments that succeed in helping a micro-enterprise to grow sustainably can be repaid and recycled to help other businesses develop. In this way, the impact that TradeRelief has can snowball and the donations it receives can be used to the greatest effect.
Do you offer loans or equity investments? What rate of return do you seek?
Our current operations all involve debt-based financing, but we are very open to other models of business financing where appropriate and workable. We tailor our financing agreements specifically for each business based on the application received, but typically we provide payment holidays at the start to allow the business the chance to increase revenue before we require repayment, and we allow longer loan repayment periods than many MFIs. While this reduces our loan recycling rate and may increase risk, it is consistent with our aim of giving the businesses we finance the very best chance of long term success.
When fixing the price of our financing we seek to cover inflation costs and give a small additional return to cover some of our partners’ costs. The targeted rate or return tends to be between 5%-10% in real terms. While this is less than most credit providers would charge, we require greater social returns and performance reporting from our enterprises. As such the possible lower cost to the business of our financing must be weighed against the greater expectations we have of them.
What type of enterprises qualify for TradeRelief’s support?
TradeRelief invests in enterprises that meet both its charitable and commercial criteria. The charitable criteria have been agreed with the UK Charities Commission and require an enterprise to offer one or more of the following:
- generation of sustainable employment to vulnerable or poor members of the local community (eg, relief from financial hardship);
- promotion of a sustainable means of achieving economic growth and regeneration;
- the relief of sick or poor living through the provision of goods and services;
- the preservation, conservation and the protection of the environment and the prudent use of resources; and
- the prevention or relief of poverty or financial hardship anywhere in the world by providing or assisting in the provision of education, training, healthcare projects and all the necessary support designed to enable individuals to generate a sustainable income and be self-sufficient.
To meet the commercial criteria, we work with the entrepreneurs to produce a solid business plan with realistic cash flow forecasts and defined charitable goals.
TradeRelief typically supports small businesses consisting of 2-5 people as we believe they are the most effective means of achieving our charitable aims. They can generate stable income streams for staff, offer vocational training, create further employment opportunities, provide goods and services and do this in a sustainable way.
Alpha Garments is an example of one of TradeRelief’s investments. TradeRelief helped Alpha Garments acquire sewing machines and cloth for a school uniforms business after their original equipment was damaged during the political riots in Kenya in 2007. With TradeRelief’s help, Alpha Garments was able to rejuvenate its trade, employ five people and provide vocational training to a local youth group (for more information on Alpha Garments and TradeRelief’s other investments please visit our Current Operations page).
TradeRelief does not necessarily target the very poorest or most vulnerable to lend money to. We seek instead to provide secure employment opportunities to such individuals through providing business financing to community-minded entrepreneurs with the capacity to manage a substantial investment effectively. Business financing is approved on the basis of the potential to bring sustainable, positive change to the community.
There is certainly a role for organisations providing credit facilities to the very poor, but taking on investment risk in volatile environments may often not be a secure route out of poverty. TradeRelief seeks instead to lend substantial sums to highly competent and compassionate individuals, providing them with the opportunity to change their community with jobs, business expansion and new service provision.
Where do you work?
TradeRelief is based in the UK but works internationally through partners in developing countries. Currently we work in Kenya and Uganda but are actively seeking other partners globally.
We do not aim to have an official presence in the countries we work in, preferring to work through partners with a detailed knowledge of the local context. Our trustees periodically visit our partner organisations (covering the costs themselves not through individual donations).
Who are the trustees, partners and volunteers of TradeRelief?
To see a list of TradeRelief’s trustees and volunteers please click here. To see a list of TradeRelief’s partners please click here.
Where can I find TradeRelief’s annual returns and regulatory submissions?
TradeRelief is a charity registered with the Charity Commission in the UK. It’s registered number is 1140968. You can view TradeRelief’s statutory reporting submitted to the Charity Commission on their website – www.charitycommission.gov.uk.
Do you have any links to resources and studies supporting TradeRelief’s approach to development?
Please visit our useful resources page by clicking here.