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.
- 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
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?
Use to use man power to plough but now I hire animals with a plough.
Increased my land from3 lime to 2 hac
Acquiring of chemicals
g. Do you have any plans for increasing your sales to grow your business? (yes or no)
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
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?
- Do you have any assets? What are they? (examples: house, vehicle, shop, machines, animals, inventor
- House 1. Plot (indium cost) 1. Bicycle 1. Honey press
- Do you have any liabilities? What are they? (examples: loans you have taken, other debts)
- Have you ever rented anything before? (examples; a house, a vehicle, a shop)
- What was it? house
- How long did you rent it for? 4 yrs
- 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