Saturday, December 19, 2009

Rent-to-Own Update #2

Chiko & I creating a business plan with a potential Rent-to-Own Farmer

The rent-to-own project has come quite far in the past 2 months. I wanted to take the time and explain two major steps forward. Next month I'll get into the business plans and the actual payment collection stories.

First Step - hiring an agent

I knew I wasn’t going to be based in rural Zambia 365 days a year, so I needed someone to collect payments. As well, there are a thousand little bits of local knowledge that would come in useful for choosing entrepreneurs (and being politically correct) that I wouldn't manage on my own. So I spoke for hours and hours to Chiko, who is now my agent, about the perceptions people would have of rent-to-own and how we could maximize the likelihood that people will make their payments. We negotiated and he agrees that getting 15% of the asset value as a commission will work, and he only gets paid after all 115% is in the bank.

A couple key things I learned. First, was that people had to see everything as a business. In fact, similar initiatives have existed in the past and were done by the government, but they didn’t repay partly because the government didn’t try hard to collect, but also because people knew they could get away with it. Another big lesson was that we had to visit the local police and courts and the head chief so they all knew what was going on and how it works. This accomplished two things, first it gets us in their 'good books', and next to ensure to our entrepreneurs that the 10% they gave upfront wasn’t just part of a scam where I disappear and they've lost their money.

Next Step - choosing entrepreneurs

Chiko and I decided to create a questionnaire for when we interviewed entrepreneurs. It’s a funny thing when you get in the field, because if you have more than one thing to do, chances are you'll get back home and realize you forgot to accomplish part of your job. So we created this questionnaire that helps with a lot of different things. First, it’s to bring out the basics of the persons business, next its to see how they think (are they entrepreneurial) and lastly, its to drive home the idea that the equipment is for rent, and that its not a loan. Rent-to-Own is not a business idea generator, we simply want to take already existing ideas and allow them to become a reality. This is another key point that I had to have clear with Chiko because its really tempting to start making suggestions which may or may not work. And if they don’t work, the blame is on us for having the idea.

Our First Customer - He is renting an ox-drawn plough and harrow.

Below is an example of a completed Questionnaire. After completing the first 6 alongside Chiko, he has now completed 12 more without me and the quality of responses has remained very high. Reading them is like eating candy, its so interesting to see how people have tried growing their business and what they want to do next. Another big thing has been getting Chiko to answer his own questions. Of course I am here to help guide everything, but in reality he's the one who will have problems collecting money in the future if he doesn’t choose the right person with the right ideas. The tendency was to ask me about every detail.



Introduction on RENT-TO-OWN

We are running a business which rents equipment to operators in Mwinilunga. If the rental payments cover the cost of the equipment, the person renting is able to purchase the equipment for a small fee of 5% the cost of the equipment. For this to happen, the person renting first needs to come with a starting fee of 10% the value of the equipment.

Please fill this questionnaire to introduce yourself and your business to us. A farm qualifies as a business if you sell some or all of your crops.


Mr. Banda



Phone Number:


  1. Are you operating a business? YES or NO.


a. What are the functions of the business? (what do you buy, what do you sell?

Crop production-maize, beans, cassava, and groundnuts for sell. Buys fertilizer and seed

b. For how long have you been in this business? 10yrs

c. Who are your customers?

Community , schools and FRA

d. What do your customers say about your business?

My crop not enough demand is high

e. How much sales have you had in the last year? Circle one

Less than 1 million ZKW

1- 5 million ZKW,

5-15 million ZKW

15-30 million ZKW

more than 30 million ZKW

If you farm, how much land did you cultivate during the last season?

2 Hac maize, 2lima beans and 2lima groundnuts

f. What have you done in the past to grow your business?

  • What ideas have worked

Use to use man power to plough but now I hire animals with a plough.

Increased my land from3 lime to 2 hac

  • What ideas have failed?

Acquiring of chemicals

g. Do you have any plans for increasing your sales to grow your business? (yes or no)

  • If yes, what are your ideas?

Avoid hiring of the Oxen and just buy my own.

Start production of vegetables.

Acquire a pump

h. What is the biggest challenge you face in your business?

Transportation of products

Buying of fertilizer

If NO;

a. How do you earn cash?

How do you get enough food to eat?

b. Have you had a business in the past? Yes or No.

If yes, what was the business?

Why have you stopped that business?

c. Do you have an idea for a new business?

Can you explain what the idea is?

  1. Do you have any assets? What are they? (examples: house, vehicle, shop, machines, animals, inventor
    1. House 1. Plot (indium cost) 1. Bicycle 1. Honey press

  1. Do you have any liabilities? What are they? (examples: loans you have taken, other debts)


  1. Have you ever rented anything before? (examples; a house, a vehicle, a shop)
    1. What was it? house

  1. How long did you rent it for? 4 yrs

  1. What was your rental charge per month? ZMK200,000

COMMENTS – is a retired agric officer looks to be serious. Ready to pay 10% fee. Partners with the wife and asking for an oxcart after finishing the first loan

Thursday, November 19, 2009

No One Said It Would Be Easy

Having some fun showing off a bee-suit.

If I’m ever short on blog material, I can be rested assured to find plenty by heading into rural Zambia with a mission. A rent-to-own update is overdue, but this is actually a post about starting a new outgrowers system in Lower Zambezi.

First off – an outgrower system/scheme is meant to remove the marketing component of farming, so a buyer makes a deal with some farmers (possibly a contract) to buy a crop from them at an agreed upon price. It can include technical support to farmers and its also common for buyers to supply inputs for free and deduct that expense from the price they pay at the time of buying.

This old guy is really looking forward to becoming a beekeeper.

The goal is to get 125 farmers onto beekeeping in an area called Chiawa, which is on the northern shores of the Zambezi River. Most people have never tried beekeeping before but they are eager to do another cash crop. Common crops here include cotton, corn, bananas and sorghum. I have spent the past 3 days in an area where few crops are grown because elephants eat or destroy them. Oh ya, lets take a second to explain my current surroundings.

I’m currently being stared at by multiple frogs, which are really my friends because they jump around catching the bugs. The Zambezi river is about 20 meters away and I can hear the hippos making crazy noises every once in a while. It’s a 30 minute walk to the village where we set up 45 farmers in the past 2 days. Kind of a great feeling getting up and walking through 30 minutes of scrubby bushes (wondering if an elephant will get in your way) and looking forward to a day of mobilizing farmers to produce honey. Oh ya, and there are packs of baboons around too.

Why am I walking? It’s a long story, but our vehicle broke down twice and is now being carried back to Lusaka. Luckily we made out better than this tanker, who tried to cross the same river as we did.

Where was I? Outgrower system, no vehicle, lots of animals….right. Did I mention that its 38 degrees in the day time, in the shade…and at night its still too hot even with t-shirt and boxers on. I can definitely see why people pray for rain, not only to feed crops, but to cool things down. A wet towel on the head seems to work well.

The stories are plentiful, but at least here are some photos of the sweet progress so far. We built these hives in an attempt to reduce the cost down from $45 a hive to $20 per hive…we almost got there, but will end up selling them at a loss. PLUS we are doing a bit of a rent-to-own system with the farmers, they get two hives plus beekeeping gear for just $50 but only pay $5 down. It’s a tough job getting all the records right, and I imagine it’ll be a lot of work collecting the money, but maybe that’s just what it takes to get things rolling? Long-term we hope to get a couple local carpenters building hives so there is no loan type contract in place and we can just worry about buying honey.

A bike loaded with two hives ready for honey.

A new beekeeper signing a contract.

Saturday, October 10, 2009

Digging Deep

Just one week and it feels like I've been knocked down half a dozen times.

Last week I learned that a great guy I had met died in a car accident. Ryan grew up in Zambia, went to Australia for school and spent a few years in Scotland until he heard his dad died in March. Then he moved back to Zambia to begin the process of taking over the family business (an impressive commercial farm). So when I called his number, I was surprised to hear his grandfather answer the phone and to give me the news. A year ago it was his dad who was to run the company, 2 months ago it was Ryan to run the company, now it’s the grandfather.

Tuesday night I got home and my friend Kennedy, who is normally the happiest guy I know, tells me how his uncle is in jail and how he caught his wife cheating so he beat her…which ended up killing her. Tough and terrible, but the thing is I remember meeting Kennedy just over a year ago, he was sleeping on a dirt floor with just a thin blanket. Kennedy is an orphan and has had a tough life. His only family is his uncle. So when he learned that for $1400 he could post bail,

Kennedy sold everything he had bought and used all his savings to get his uncle out.

Kennedy - we call him popeye

Wednesday, my good friend Rogers didn’t show up for work. His phone was off and I had no idea what was up. The next day he showed up with a dark red eye and some swelling. Around 10pm on his way home he was attacked. People see that Rogers is getting ahead by working hard, so they figure he has money. He has been building a house in a new neighbourhood but its not finished, luckily he has enough money that he can afford to live in a better area and plans on moving as soon as possible.

Thursday, near the end of the day, one of the guys comes running in to say that the carpenter cut his finger off. We are building hives for farmers in lower-zambezi who want to start beekeeping. We figured that a long-term solution was to have local carpenters build the hives and sell them directly, although for now we're kick-starting the whole thing by building a few hundred and by training a couple carpenters at the same time. So the first carpenter we're training failed to stop when his eyes were getting full of sawdust, and next thing you know he was cutting his fingers. Luckily, they're all still attached and he'll be back to normal fairly soon.

The carpentry shop - we're building the roof today

Friday, I get my list of things to do and head into town. On the way, I realize my gas light is coming on. I try the first gas station, they are out of petrol. I try another, and another and another, and all the while I'm running on fumes. The fifth place had fuel, so I was just 30 minutes behind. But it looks like the whole country is running out of fuel and I have no idea when that situation is going to get better. Imagine you cant buy fuel.

Today (Saturday) I get news that the company Zambikes has lost its lead guy. Here's a business that does a ton of good and has been fighting the good fight for the past couple years to make something, and now their lead man dies.

As much as I'd like to share the all good news for the week, because there has been some good stuff, I'll just share one bit of news. My friend Rogers and his wife Cleo had a baby boy on Thursday night. He looks amazing and both mom and baby are healthy.

Only 4 hours old - He's Looking Good

Each time there is bad news or unexpected road blocks along the way, it makes me wonder if I'm going down the right path, and if I want to continue down that path. If Zambia has taught me one thing, its to know how to dig deep and keep on going.

Monday, October 5, 2009


What is Rent-to-Own?

I've started a little project called "RENT-TO-OWN" where I rent stuff to people until they own it. Seems so simple that I can't believe no one else is doing it.

Its founded on the belief that the two biggest constraints for a business to grow in rural Zambia are Capital and Knowledge. Unfortunately right now the culture of most people in Zambia holds a belief that all loans are 'soft' loans and if you have a good excuse not to pay it back, then you don’t actually have to pay it back, and most people don’t have any collateral to collect either. And in an environment such as rural Zambia, everyone has a good excuse. Its just a fact that relatives die, they leave kids behind that need to be looked after, parents and siblings get sick and require money for treatment. If I were to loan capital in the form of cash - I'd never be able blame anyone for giving the money for something else. That’s why I think renting the required capital can work. If the person renting continues to rent for a long enough period, then they become the owner of the equipment they're renting.


I have hired a friend to be my agent in Mwinilunga. So far there are 8 people interested in renting from us and we'll be choosing two of them before the end of this month. As well, we've decided to work with both those who do have some collateral and those who don’t. Originally I thought we should only aim for those with no collateral, but then realized that social benefits could come to the community from both types of entrepreneurs. I figure we're just learning so why not try a one of each to start.

I've pasted the RENT-TO-OWN agreement below for those who are interested. You'll notice there is an effective 15% interest if the person successfully completes the contract. (10% upfront and 5% in the end) Some people feel this is too high, but when you compare it to what's available, 50% per month is not unusual, then it looks too low. Truth is that business in rural Zambia is extremely difficult. Imagine no power, no cell phones and terrible roads - then add on the cultural norms. That 15% can be chewed up very quickly. Chances are it could run sustainably at somewhere around 25% interest not including my time, so I'll look to subsidize the loans by about 10 - 15% to make up the difference.

The whole point is to turn money over and help create more efficient and productive businesses.

I'll be posting updates on how it goes here on my blog, including profiles of the people we end up working with, the equipment they rent and how its affecting their business.

-------------------------DRAFT COPY ONLY -----------------------



Mark Hemsworth (THE OWNER)



This Business Agreement (the "Agreement") is made by and between Mark Hemsworth of 34 Lutuba Road, Roma Township, Lusaka and NAME OF ENTREPRENEUR and ADDRESS OF ENTREPRENEUR (the parties).

The parties agree to the following terms and conditions;


The OWNER will purchase a name of machine (the asset) and rent it to the OPERATOR for xxxxx ZKW per week. The full value of the asset including delivery is xxxx ZKW.

The OPERATOR has paid 10% (xxxxx ZKW) of the value of the asset in advance. This is a one-time fee for setting up the contract.

Upon receiving the asset, the OWNER agrees to train the OPERATOR on the correct actions for maintaining the asset and operating the asset. The OPERATOR must understand this training completely before using the asset.


The OPERATOR agrees to pay the rental payment on the following days. The OPERATOR will be given a book in which all transactions are recorded and both parties are to sign and date each transaction for good record keeping. The payments are to be made to the OWNER at the location of the asset.

October 7

October 14

October 21

October 28

November 4

November 11

November 18

November 25

December 2

December 9

December 16

December 23

December 30

January 6

January 13

January 20

January 27

February 3

February 10

February 17

February 24

March 3

March 10

March 17

March 24

March 31


1. If the OPERATOR rents the asset for xx weeks straight as outlined in the payment schedule, and pays full rental fee of xxxx each week, then the OPERATOR has the right to purchase the asset for 5% of its original full value, which is xxxxx ZKW. Upon receipt of this purchase fee payment, the OWNER agrees to end this contract successfully and the asset now belongs to the OPERATOR.

2. If the OPERATOR can’t pay the full amount on time, the OWNER must give 7 days’ extra to deliver the money if this is the first time payment has been late. If the money is received before 7 days, the contract continues. If payment is still not received, scenario #3 occurs.

3. If the OPERATOR can’t pay the full amount as the schedule indicates, and the OPERATOR has been late before, then the OWNER has the right to take the asset away from the OPERATOR and end this contract in failure without any further payments to the OWNER. As well, the OWNER doesn’t pay back any of the rental payments or the 10% starting fee.

4. If the OPERATOR loses the asset, the OWNER and OPERATOR will launch an investigation with the police in hopes that the asset can be retrieved. The OPERATOR continues to pay the weekly amount owing until all scheduled payments have finished and the 5% purchase fee is paid, at which time the contract is ended successfully.

5. If the asset breaks down, it must be repaired. The OPERATOR is to report the breakdown within 24 hours. The OWNER is obligated to repair the asset as quickly as possible. While the machine is being repaired, all rental payments are paused until the asset is back to the OPERATOR and is working properly. The full cost of the repairs is split between the OWNER and the OPERATOR.

a. If the OPERATOR cannot pay their half of the repairs within 2 weeks of getting the asset working again, then scenario #3 occurs.

b. If the OPERATOR pays for half the repairs within 2 weeks, the contract continues and that amount of money spent by the OWNER on the repair is added to the 5% purchase fee.


A successful contract results in the OWNER receiving the net amount (the 10%, the cost of the asset, the 5%, plus any cost of repairs paid by the owner) at which time the OPERATOR now becomes the OWNER of the asset. The OPERATOR is now able to use or sell the asset however they see fit. Furthermore, the OPERATOR can apply for a new RENT-TO-OWN asset if they like, and the OWNER will take into consideration the fact that the application is from someone who has demonstrated some credibility.

A failed contract results in the OWNER remaining with the asset and the OPERATOR does not receive their 10% payment fee back or any of the rental payments that have been made. The OPERATOR is free to apply for a new RENT-TO-OWN asset, however, the history and circumstances of the first contract will be taken into consideration. The OWNER has the right to sell, utilize or rent the asset to an operator.

Today’s Date: ___________________________

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers.

Signed by

For and on behalf of For and on behalf of


Name: …………………………… Name: ………………………………

Signature: ………………………. Signature: ………………………….

NRC No. ……………………….. NRC No. ……………………………

Date: …………………………….. Date: ………………….……………


Name: …………………………… Name: ………………………………

Signature: ...…………………… Signature: …………………………

NRC No. ………………………. NRC No. ………………………….

Date: ……………...…………… Date:….……………………………

This contract is verified to be an enforceable document by the Zambian Police.


Thursday, September 17, 2009

So, what is Mark really up to these days?

My life has become sorta normal again…although normal in a whole new way. Being sick for most of June and part of July has forced me to reset the way I think about life in Zambia. It's made me want the "nice stuff" a little more. So now, after 18 months, I feel totally comfortable about spending the entire weekend hanging out with other ex-patriots, eating at restaurants and such. So its nice to balance my Zambian life and ex-pat life.

The reason I'm writing though, is because a new EWB volunteer named Arthur asked me what I was doing here, and as I was explaining the 4 big projects I'm workign on at the moment, I found myself getting pretty excited about it all. Not sure why I was surprised by it, but either way - I figure I should share that same conversation here on "the information super highway".


I am helping a company that has a lot of good social impact, specifically in rural Zambia. With any luck, they'll have more good impact because I'm around.

Largely, I believe companies are busy trying to stay afloat, which involves either improving current operations - or creating new operations.

My first 18 months here has been focused on the first way to stay afloat, improving current operations. I've put more details about this at the end of my blog. (I'm not offended if you skip over the list)


I'll introduce each section here, and if it seems important, I'll follow up on another blog with a full description.

JOB #1 - INCREASING HONEY PRODUCTION by helping Forest Fruits get 500 new farmers producing honey in a new area.

An outgoing farmer from a totally different part of the country has been pestering Forest Fruits for 2 years to come and work with him and other farmers in the area. Finally we're going to do it, but the big obstacle to beekeeping is the price of the equipment - which is essentially the beehives & the protective gear. This job can be split into two parts.

A - get the cost of the equipment to be as low as possible

B - create some financing so the beekeepers can afford the equipment

Item A involves making hives ourselves by setting up a workshop and hiring a carpenter. (this is this weeks job) Then next week we're brining in two of the local carpenters from the village to work with us and learn how to make them so they can sell them directly without our involvement.

Item B involves a sort-of loan system. We haven't figured it out yet, but I'm liaising with the agent to put something in place that'll work for everyone. (likely a rental-type agreement with a small down payment)

JOB #2 - CREATE NEW PRODUCTS for Forest Fruits to diversify its markets

I wish I were a food technologist, or a chemist, or something. Anyway, there are a lot of opportunities to create new products from honey. Just look at what Burt's Bees has done. Right now it looks like I'll be going to South Africa for 2 weeks to train with a PhD on how to make mead. I will be responsible for bringing this knowledge back and setting up a small meadery here in Zambia so that Forest Fruits can have another high value product.

JOB #3 - RUNNING MY OWN PROJECT called rent-to-own

A few months back I got the idea of renting machines to business owners so that they could pay them off as they use them. Business owners includes farmers. Imagine a farmer who sells tomatoes and cabbage during the dry season, she'll have to carry water from the nearest source one bucket at a time to irrigate her crops. But what if she had a pump, it costs just $500 for a good diesel pump and that could boost her income by $2000. Rent-to-own just requires a deposit of 10% so the farmer only needs to give me $50 to make their business idea into a reality, rather than the full $500. In the next month I'll be starting at least 2 of these "owner - operator" relationships as a bit of an experiment. But I think it'll go well.


EWB has evolved over the past 6 years as its been working in Zambia. We started by working directly with farmers, and slowly realized we could have more impact by helping organizations that were working directly with farmers. The default was to partner with NGO's. In Ghana, EWB has worked with the government, which isn't a viable option in Zambia. So the time has come to do a fresh scan of potential partners, and I am heading up the private sector scan. I am interview companies to see what their vision is, how closely do they work with small farmers and what are their current challenges.


Turns out, these very exciting jobs are also very time consuming. My schedule for the next 3 months is a bit out of control. Should be fun though.

Please send me any questions, suggestions, thoughts, etc.


And for those interested...

here is my list of what I've accomplished by working with people inside the company over the past 18 months. As I mentioned, most of it has been towards making current operations better.

Better management systems;

§ Standard operating procedures (SOP's) are now in place

§ The management team is now able to create their own SOP’s

§ The field database on farmer info and purchasing info is now useful

§ Improved computer skills for the team (everyone is on email and can use excel)

§ New Structure for out-grower system - (group leaders now get a commission)

§ Inventory control system in place

§ Supplies procurement system on the way

§ Logical Accounting system for retail sales

§ Improved information flow via weekly reports, meeting minutes & inventory

Engineering systems I've helped to install;

§ New 500kg Weigh scale

§ New Water supply/reservoir for when the city water is turned off for days

§ Diesel burner for when the electricity is turned off for days

§ Drum filling system for higher quality honey

Creating new business operations;

§ Construction and design of the retail packaging plant

§ Design and implementation of the honey straw filling system

Friday, August 14, 2009

And We're Back

Its been a quiet couple months on my blog because I've been feeling less than optimal. Africa has all kinds of curve balls to throw, including a plethora of health related ones. Unfortunately I caught one of these tick born disease and have been fighting to get it out of my system for the past 10 weeks.

I am currently enjoying some time in Lusaka while developing new products from Forest Fruits. Not sure what I'll be doing from September - December.

Here is a series of photos showing a bit of what I've been up to.

Three days ago we headed to a community on the Zimbabwe border.

Got a sense of the farmers commitment to keeping bees and set up a few demo hives.

Gorgeous place this time of year, but next month it'll be too hot to move.

Was in Joburg to see a doctor last month. The city has a
big industrial sector much like Toronto's.

Went to Zambia's agricultural show with my friend Rogers and his son.

Got to visit an amazing farmer in Malawi - Mr. Ngulube.

Have had some good times in Lusaka with EWB friends.

Thats all for now. Some interesting stuff is coming down the pipe and I'll be sharing that here on my blog.