Rent To Own

Rent to Own (Zambia) was founded to facilitate access to equipment by smallholder farmers and rural MSMEs. Small Foundation supported RTO with equity investment, debt, and advisory . This 10-year partnership has generated valuable lessons for SF and for the sector as a whole.

Our partnership and learning:

Rent to Own set out to explore the business case for providing equipment finance to smallholder farmers, a market segment that has typically been seen as too risky to work with. Over the course of its operations, RTO leased around 8,000 units to farmers, one third of whom were earning less than $1.90 per day, and achieved a repayment rate of over 90%.  Rent to Own estimates this activity generated around 8,000 jobs for farmers as well as enabled around 600 farmers to benefit from solar irrigation.  According to customer feedback, 92% of customers experienced an improvement in their quality of life, with 62% reporting improved productivity and 55% reporting increased income.

The high repayment rate achieved was largely due to the strong relationship RTO built with its customers and its focus on productive assets. Despite this, RTO was not able to develop a viable business model and is no longer operating. In part, this stems from the difficulty and cost of reaching the fragmented rural poor, but there were also some specific external challenges such as those arising from Covid-19 and the recent economic environment in Zambia. SF will take forward the learnings from this partnership and apply them to future ventures in this space.