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.