EFA operates through a social enterprise in Tanzania. Our subsidiary uses standardised investment processes to keep transaction costs to a minimum, and processes are designed to prevent fraud.
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 invest through our for-profit subsidiary Equity for Tanzania Ltd, which aims to be the most efficient small business investor in the market. Equity for Tanzania is a social business, aiming to have a high social impact while attracting commercial "impact investment".
- 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.
- We endeavour to maintain ‘additionality’, so we do not crowd out development of commercial provision. We therefore target businesses that cannot get funding elsewhere. Our effective interest rate is benchmarked slightly above commercial rates for collateralised debt (where available).
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.
EFA’s systems are designed to prevent fraud by customers, suppliers or employees. For example, controls include:
- 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 where possible, 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 regular account statements, so they can check all of their repayments have been recorded.
- Bank reconciliations of customer repayments are performed regularly by a remote book-keeper based in the UK, to identify any discrepancies.