Hendrik und President Addo

The fairafric bond

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The fairafric Bond

You have to admit, fairafric is no stranger to crowdfunding. With three Kickstarter campaigns, two crowd-equity raises, a crowd-loan and crowd-coupon (paying interest with chocolate) we thought we’ve seen it all. 

 

With a €5 Million factory to be build within a year, we dared to challenge the crowd yet another time. While banks in Europe have started to ask for negative interest, they are still expecting a social business to pay 10% for a loan to finance a job generation factory in West Africa. 

 

So banks receive 10% interest for a loan in Ghana. The money for the loan is provided by individuals. Those individuals however don’t get a cut of this interest, some are even charged a negative interest. That got me thinking. Why not cut out the bank and meet in the middle? Dozens of hours of research and lots of conversations later I realized there is even more regulation around borrowing money from the public than around bringing chocolate Made in Africa to Europe.

 

The obvious solution would have been to use a platform that brings together individual lenders and the company. What shocked me, is how much they are charging for the service. The well known platforms charge a fee of 15% plus a yearly charge on top of that. So if we collected €2 Million from investors on that platform and repaid over 7 years, more than €400,000 would need to be spent on fees. Of course, a company in need of funding and no one to turn to might accept that, but we have a big crowd ourselves, we only needed the legal part to be dealt with!

 

So another couple of weeks of research later I finally had the solution. A law firm with tons of experience with the regulatory setup in Germany loved our story so much, that they agreed to help us raise the €2 Million at a fraction of the cost the big platforms ask for. Instead of €400,000 the whole process has cost us less than €10,000 (including government charges), close to 50 times less. Or 393,000€ less! 

 

So off we went in early November with a simple offer: Borrow us money to help finance a solar powered, state of the art chocolate factory in rural Ghana where our organic cocoa beans are growing. We pay 5% interest over a 7 or 8 year period and you make social change happen. The response was overwhelming! Before Christmas we had collected more than €1 Million, in total we have raised close to €1.4 Million (through bonds, coupons and interest free loans) until late January with the campaign still being open until Fall 2020. 

 

For me this is really a wonderful story and it motivates me a lot more to work for interest payments to the wonderful people who helped finance the factory than for an anonymous middle men. Investors receive a 5% interest they are unlikely to get anywhere else today and know for sure that their money goes a long way in Ghana.

For anyone who is still (or now) interested to join the 400+ subscribers of our bond, here is where you can find out more and also subscribe: fairafric bond 2020

 

 

This website is advertisement for a bond for which a security information sheet (Wertpapier-Informationsblatt) was created. This sheet can be downloaded here. You are about to invest in a product which can be hard to understand.