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Rent-to-Own - Social Enterprise in Zambia
Category: Social Development | By CMC-2011, 30-Sep-2011 | Viewed 6140  Comments 0
Rent-to-own for a productive future: http://vimeo.com/29839392
My name is Mark Hemsworth. Four years ago I left cow town to volunteer for Engineers Without Borders.  They placed me with Africa's largest exporter of honey, located in a remote part of Zambia where the average farmer earns less than $.30 a day in cash.  This was doubled through honey sales, and when I looked around I kept seeing more and more potential.  Although I'm trained as an engineer, I slowly realized that my Dad raised me to be an entrepreneur. I asked farmers and business owners what business ideas they had, and a very common theme came up, they all wanted productive assets.  Irrigation pumps, oil mills, ox-carts, and energy sources like solar panels and generators.

Here it was in front of me; a solution to economic growth…but how come it isn't happening already?  These entrepreneurs don't have access to reliable information about what equipment was out there. They're also extremely far from suppliers, some even too shy to buy from strangers.  It's a 35 hours round-trip to the capital.  Imagine having to drive to Winnipeg to buy a $250 item, and there being no alternatives. No UPS, Fedex, or even reliable mail. Most don't have any experience operating equipment, and would risk using it wrong or even breaking it right away.  Finally, it takes a long time to save up for such a purchase, thus access to credit is necessary.

Mark Hemsworth
I started playing with ideas for how to overcome these market failures.  I worked with local business men and created a catalogue of productive assets which could create profits to help pay for themselves.  We decided that delivering the item to the farmer's field was important, and providing installation and training to ensure that the equipment would indeed be productive.  To tie it all together, we create an agent model that leverages the strong social networks that already exist in these communities.  This gave us a trusted and permanent presence. We use it to determine which entrepreneurs are credit worthy, and we pay the agents a commission once they've collected all the payments.

After experimenting a few times, we refined the model and decided to start a business called Rent-to-Own.  To date, we've worked with over 400 entrepreneurs with $300,000 of equipment in two provinces in Zambia.  We're growing fast, have doubled our reach, and have partnered with two organizations who work with over 50,000 farmers each.  We're constantly looking for ways to improve our model and create partnerships.

It's refreshing to see that the Micro credit conference is focusing on social enterprises this year.  There is a surge of enthusiasm towards this topic.  I feel it's important to make a clear differentiation between a business that creates profits which are set aside for social purposes, and a business that creates social benefits within its regular operations.  Both are important, however, I would differentiate by saying one business has a solid CSR policy, while the other is a true social enterprise.  Tailored grants to help learn and innovate are desperately needed to help these social enterprises grow and overcome market failures.

Watch Mark's video presentation:
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