Catering to the Asset Financing needs of Smallholders

Rent-to-Own is a business that was born out of the massive need for financing beyond the standard micro credit model. Specifically, we provide asset financing which is complemented by a holistic set of services that ensure each smallholder farmer and rural business owner can succeed. For over two years we have provided 600 clients with productive assets, anywhere from water pumps to refrigerators to dough mixers. Clients start with a deposit then make monthly payments for up to 14 months. Once they complete the payments the asset remains theirs and continues to product new revenues. Each piece of equipment creates an average of 1.5 new full time jobs and annual profits of $700 for the client for three years.

The challenge we faced with this model was trying to satisfy a wide variety of businesses with a common set of repayment plans. Each business is different and therefore has different cash flow realities, some have cash based on the season, and some require 18 months to make financial sense.

We have adjusted our strategy to focus on just three types of businesses rather than 15. Today we are interviewing seed and other input suppliers along with farmers and extension officers to learn more about irrigation farming so that two months from now we can be delivering pumps to 70 farmers as a pilot. These interviews feed into our product development process that begins with knowing the client’s business better than they do in order to support them better. We will be doing the same for each product we offer as part of our goal for this year which is to create a total of $500,000 worth of new assets being used in rural Zambia.

This approach is embracing the complexity that exists for each type of business and each part of the country. Rather than having a cookie cutter solution we are creating a cookie cutter approach.