Eunomia Micro Finance Project
To see what has been happening with this project in 2012, click here.
Empowering entrepreneurs in challenged communities is our main goal. We established this program in order to give an opportunity to producers who have an idea but no means to achieve it. This is a "3 in 1" project, where we lend money, we build a fair product hand-in-hand with the producers and we help the community. Eunomia was established to help develop a truly fair, sustainable, and empowering system of trading, supporting small producers spanning all corners of the earth - promoting an improved quality of life for said producers and the communities that surround them.
We set up a protocol that should be followed by every producer who wants to work with us. Composed of seven different steps (funding, selection, confirmation, creation, mentoring, online sales and local sales) and accompanied by our team, producers will be able to build their own business in a sustainable, fair and profitable way. We provide them with the loan, the sufficient knowledge and background to operate their business efficiently, creating constant support for the community.
Funding different projects throughout the world implies the fact that our team would have to constantly raise money from various sources. Our first idea is to get the volunteers involved by investing small amounts of money to start new businesses. Typically, we would ask between 20 and 200 euro from them to be invested in different projects, which they would get back without interest after a certain amount of time. Doing so, we would easily be able to gather between 2000 and 5000 euro, which would allow us to fund a portfolio of various projects, creating a variety of products and services, which reduces the risk of non-payment. Furthermore, that money would be underwritten by AWF to ensure that investors get their money back.
In the long term, once our portfolio of products and services is various enough, we should be able to propose attractive investments opportunities for bigger investors such as corporate or fortunate individuals looking for a clever placement of their money. By charging interest rates around 10% to our borrowers, we can easily cover our expenses on bigger loans and/or make profit, and propose a very interesting gain to our investors. Any percentage over 4 is already very interesting, as well as the fact that it is invested in an NGO makes the placement tax-free, which can attract numerous investors.
When investing money, whether it comes from a volunteer, an individual or a corporate, you have two choices: either investing in a communal fund, that is to say not in a business in particular, or in a project of their choice. Our idea is to create a strong visual impact on the web shop, so that when one purchases a product, they can follow via a video and/or photos the whole production cycle, as well as the individual story of the producer. If the latter is in current need of another loan, the customer can chose to invest in the fund dedicated to that producer, where they would have the option of earning interest on their investment if their donation is important enough.
Although they might not be that important, it is still relevant to take into account the costs implied by changing the money that is given to us-mostly in pounds or euro- into the local currency of the country we are operating in.
II. Project Selection
The first step of this framework and probably the most important in order for it to be successful in the field relies on the way we decide, which projects are worth investing in and which ones are dead ends.
To do so, it is crucial that we take time to analyze in depth every single business idea that is proposed to us. In countries such as the ones we are operating, an environmental analysis, through the PESTEL framework for example, is indispensable. As a matter of fact, it is reported that many businesses funded tend to fail because the latter did not pay enough attention to macro-economic issues such as political instability or the risks of environmental disasters like hunger or floods for example. Also, although it might seem obvious, it is important to analyze the viability of the projects regarding to the region's resources, demand and competition on the market. As a result, a complete market analysis should be provided for each project we chose to invest in, in order for each investment to be secure and to minimize the risk of failure of the businesses we fund.
In parallel to that, during the process of project selection, a first estimation of the costs, should be provided by our team, as well as an estimation of the benefits one could draw out of their business. This part is very important as from the estimation we make of the success of the business, we can then decide how much money needs to be invested in the project, and we can start, in cooperation with the entrepreneur, to decide on the specific terms of the loan. Finally, it is crucial to look into the legalities of each project, as a sale in western countries implies that there are many norms to comply with, especially for alimentary products, and more importantly in the European Union (CE norms, ISO, etc….). We, as the funder and the organization that guarantees the success of these projects, cannot afford to see a project fail once the production cycle is over and the sale part made impossible because the product does not comply with the laws and norms established in the countries we sell it.
In order for this step to be successful, we need to be able to send volunteers with a certain background in economy, finance and law. This step may be time and labour consuming but again, it is indispensable and it would be irresponsible from us to underestimate the importance of this part of the process, as it is the angle stone on which this entire project relies on.
III. Project confirmation
As soon as the project is accepted, a meeting with the producer is organized to talk with them about their future business. Indeed, we want to stay on his side all along his project to have a sustainable cooperation. We are going to create a partnership with them to have a clear idea of what is going to happen within the next few months with them. In this partnership, Eunomia is here to ensure that the production process is respectful of our requirements. We want to ensure a transparency regarding their business to the consumers and to be able to guide them all along the creation of their product.
Moreover, at this step of the protocol, Eunomia is here to ensure a fair, viable price for the producer. Indeed, it is a motivation for them as they would be able to see how their work can be profitable. This estimation is based on different criteria such as the cost of production, the social costs or even on the packaging. Volunteers will try to evaluate, regarding the project, which costs the producers will face for the production, which means the machine if applicable or at least the materials used. We also want to ensure sustainable social practices; with the market research we are able to make an estimation of the wages, regarding the disparities and the social situation of the country, if there are employees. We want employees to earn decent revenues to support their family. We want to have the producer realize that social advantages are possible with a business; our goal is to provide them with adequate housing and safety standards that they all deserved by working. In another part, Eunomia negotiates with the partner a premium that is here to support their community by creating a communal fund. This tool is used for the development; this is a social, economic but also environmental investment. This decision must be taken in a transparent way, but also in a careful way with a plan and a budget. Therefore, each producer has to redistribute a percentage of their benefice to improve the condition of the community they live in. This amount of money can be used in whatever area they would like, as long as it is used in a fair way. It can be for the renovation of infrastructures or creating a new communal place. If the producer wants to sell overseas, we also assure to give back a percentage of our benefice in the community (see in 6.Online sales). We want to create a synergy in the community based on solidarity.
Eunomia negotiates with the partner also the reimbursement of the loan, if applicable. This part takes into account whether this is a start up or an investment to support a business. In the case of a start up, we do not ask interests, we do not want to overwhelm them with the troubles they would go through when borrowing money from a bank. In the case of failure of the business, we do not ask for any money back as we share most of the responsibility for that fiasco. In the other hand, if it is an investment in an existing business, we shall ask for interests depending on the type of business, on the amount invested but also on the success that we expect from the business.
After the deal, the producer's business is put on the shop online to be introduced to the consumers. Their story is explained as their truly fair system of production to raise awareness. This step opens the funding part with the possibility to invest in the different businesses.
IV. Creation of the business
Now that the business is official, our team is here to help the producers to launch their own business. This step starts with a media part, which includes a name, a logo but also a place. Therefore, mentoring sessions have to be done before any creation to establish basis about business. We want to share our knowledge with the producers to guide them; we want them to succeed which is why we support them all along this starting process.
Moreover, the creation of the business also deals with mandatory requirements that they have to follow to acquire the appellation "Truly Fair". We want each product to be made in a respectful way; the goal is to have fair products for our consumer. The producers must establish an organizational democratic structure with control of the production. Each member should have an assigned job, should be aware of each standard, and their work could be controlled at any time. We will have a look on the quality of the product and will also try to improve it all along, we want producers motivated and with an ethical attitude. Each producer has to act in a sustainable way toward the environment. They should have a safe, sustainable management of waste, they should not use genetically modified organisms, and they should minimize their environmental impact, which means improving their methods of working. They should not use materials from protected areas and respect the national and international regulations in terms of environmental protection.
We also want to establish sustainable rights for the workers and producers. The business structure has to be transparent and non-discriminatory. As we said before, in the partnership, we want to establish social rights and security for the employees. This part deals with a lot of standards as no forced child labour, adequate health conditions, mentoring possibilities, fair wages, and freedom to be part of unions. The employers should raise awareness among the employees on the sustainable practices but also enable them to take decisions.
With our team of skilled volunteers, Eunomia wants to follow the producers to guide them in the process of managing their business. Therefore, we organize mentoring sessions on a regular basis to introduce various topics to them, such as human resources management, marketing, management, accounting or the international background. Doing these sessions in group can raise different questions that are helpful for everybody. We try to create a synergy, in this way, when we will leave them, they will be able to help each other and maybe to create co-operatives.
On the other hand, we do particular mentoring for producers to apply in a concrete way what we shared with them in groups. These individual mentoring are focussed on issues of specific interests that producers could face in their sectors; they will complete their knowledge.
Both of these mentoring sessions, whether they are dispensed individually or in-group, should be taken care of by skilled volunteers or, even better, by professionals we would invite to talk on particular topics or on a particular field (e.g.. Agriculture, textile, etc….)
VI. Local sale
Regarding the local sales, after the first steps about the production Eunomia will support local sales and distribution and also here to help evaluate an intelligent pricing strategy. Indeed, after the whole production we can fix a purchased price that takes into account the costs of the production as the raw materials used and the social aspects but it also implies the cost of packaging that they will undertake.
For sure, we follow their evolution in the market; we still have a look on their figures in order to be sure they understand how to manage their business but as soon as they proved to us that they are profitable, independent and fair, then we stop being involved in their business.
VII. International sale
At the end of the production cycle, Eunomia's role is to facilitate the sales and distribution of the product on international markets. Depending on the product, if appropriate, we buy the product in bulk, ship it and stock it in a local of ours in the West, in the most economical and environmentally friendly way. When online, we sell the product for a price that allows us to cover shipping and stocking costs, to pay the producer a fair price, but also to draw a certain benefit out of the sale. Eunomia then uses the major part of this benefit to reinvest in the community, which plays the role of a premium.
As said above, we take care of the transport obviously in a fair and sustainable way. Depending on where our producer is based, we will transport the stocks by air, sea, rail or truck. Our choice is led by economical reasons but also by environment ones. Moreover, our goal is to sell truly fair product, so this step has to done with all the precautions necessary to be environmentally friendly and sustainable.
The Eunomia Protocol allows small entrepreneurs throughout the world to create or develop their business in a way they always wanted to but never could, by the lack of means to achieve their dreams. A product certified by Eunomia ensures a fair price to the producer, sustainable social and environmental practices, as well as improved living conditions for the workers and the whole community around the entrepreneurs. Our objective is to create a synergy and help numerous people by helping one in the first place. Not only is this project profitable for investors, but it also ensures that every individual implied in the supply chain gets a fair piece of the cake. Eunomia promotes a full circle of solidarity from the investors to the producer, not forgetting the consumer, who plays an active role in our scheme, by getting deeply involved in the lives of people they buy product from.