Business philosophy

EFA has a social mission, but we believe in business: both as the solution to poverty, and as the best method to get there.

• We are run as a business, aiming to be the most efficient small business investor in the market. We are not just like a business - our Tanzanian subsidiary is a business, and we aim to attract for-profit capital.
  
  
• We target for-profit businesses which we believe are commercially viable, so that our social impact is more sustainable and we do not needlessly sacrifice financial returns. This is reflected in employee incentives: we earn carry if funds meet both IRR and job-creation targets, above which carry depends solely on IRR.
  
  
• We endeavour to maintain ‘additionality’, so we do not crowd out development of commercial provision. We therefore target businesses that cannot get funding elsewhere, and set our effective interest rate above commercial rates for collateralised debt (where available).

Standardisation

We use a standardised approach to keep costs low and allow operational scalability.

• Standardised equipment finance product, not tailored to individual customers. This reduces negotiation time and management oversight and makes it easier to resource.
  
  
• Application form functions as a business plan template. Prospective customers are invited to a half-day seminar where they are given basic training in how to complete the form, but the onus is on the applicant.
  
  
• Local managers conduct a basic diligence taking less than 3 days. Includes checking personal references, stress testing economics and interviewing customers.
  
  
• Ongoing monitoring managed through a triage system, to prioritise resources.

Preventing fraud

EFA’s systems are designed to prevent fraud by customers, suppliers or employees.

• All investments approved by EFA’s Investment Committee.
  
  
• New customers must provide three pro-forma quotes for the required equipment.
  
  
• EFA pays the supplier directly so that the customer never sees cash.
  
  
• New suppliers vetted thoroughly and also approved by EFA's Investment Committee
  
  
• Cash kept in the UK, and transferred to local subsidiaries as needed.
  
  
• Customers encouraged to make repayments directly into EFA’s local bank account, so that cash does not go through local offices.
  
  
• Customers given repayment receipts, as well as bi-annual account statements, so they can check all of their repayments have been recorded.
  
  
• Rescheduling controlled by Fund Manager, and longer rescheduling by EFA's Investment Committee
  
  
• Bank reconciliations performed regularly to identify any discrepancies.