Rent To Own Africa Commerce Essay


This report illustrates an organization run in Africa which helps in growth and development of the rural areas of Zambia. It shows the way it has been running in the short span of time, and the achievements it has had so far. It also demonstrates the managerial problems faced by the company which provides micro financing and to create awareness and help the people in the rural areas. With foreign support in finance and giving an initial start to the non-profitable organization, challenges faced by same is illustrated with varies solutions shown in terms of human resource management and other managerial decisions to be taken for the purpose of solving issues.

About Rent-to-Own Africa

Rent-to-own Africa, a foundation laid in 2009 in Southern Africa, is a social enterprise which works with small business entrepreneurs in rural Zambia to decrease the poverty by providing finance for productive assets. Rent to own Africa specially helps in the rural Zambian Entrepreneurs for an all-inclusive service where they provide sources of equipment with finance and training. It is a Business Development Service in the rural part of Zambia which helps young and efficient entrepreneurs, along with those innovative business owners with their ideas to lead to a Business potential which they are capable of, but due to lack of infrastructure and facilities are curtailed with the lack of availability of appropriate equipment's, in areas like Manufacturing or farming. Rent to own helps provides with its complete support by providing assistance with low cost distribution, guidance in asset selection, tailoring finance and training services which would help each entrepreneur to employ there assets for a long term benefits.

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About CEO

The Founder and Director of Rent to own Africa a young talented and a successful entrepreneur in his field, Mr Mark Hemsworth who completed his degree in Canada at the University of Waterloo and after working with Engineers with Borders in Western Canada, recognized the growth of opportunities in Zambia, in the sector of small and medium sized firms, when he moved to Lush green Southern Africa in 2008. While working for engineers with border and in the most remote and rural communities of Zambia, Mr Hemsworth determined the main bottleneck for the lack of growth in spite of having possibilities in small business sectors, was due to Lack of finance which did not give them access to equipment's and the Productive assets required for growth and development in the rural areas. He thus, realised that the opportunity for the growth in the SME sector with assistance of Micro financing the assets. In 2009, with the help of finance from Engineers without Borders (EWB), a leading organization in the development of Canada, he started Rent to own. It is small team of 15 staff members and 44 agents, and has financed over USD $ 400,000.


Rent to own Africa provides a source of equipment for the rural areas of Zambia where, the market is not enough to have a local operator to provide them with the resources, therefore they have a catalogue designed for the local businessman and young entrepreneurs for providing them with these equipment's. This equipment's are available in the capital of Zambia but the remote areas where Rent to own operates is ten to twenty hours away, therefore they work as a channel or link between rural areas and the Capital of Zambia. The prices at which Rent to own provide for the goods and equipment's are comparatively cheaper, than a person travelling all the way to the capital and purchasing the same. Rent to own helps every type of business like a bakery, butchery or farmers. They have options of financing the equipment's as well as training the same for a higher production and creating a business plan for the benefit of the businessman. After just 12 months of its operations, Rent to own has had a successful run with finance of over USD $200,000 worth of equipment to over 250 clients.

Business Plan

Small and medium sized business and entrepreneurs of Zambia found Rent to own as an aid to provide them with finance as well as productive assets. Rent to own provided them with the much needed asset information, low cost distribution, tailoring finance with long term repair and training services for entrepreneurs who worked in manufacturing business or farming sector. In fact Rent to own is the only player in the African market providing such a low cost service. Rent to own believes in the local people of Zambia having a level of trust with them. In order to create a good position of selecting credit worthy clients and high rates of payments, the community are is has a Agent whose is a member of the target community and helps in gaining trust from the clients. With the help of having an agent of their own community it helps them to judge the efficiency and the rate of return. Rent to own follows does not maintain an inventory of goods, rather the catalogue itself has all the details and the variety of options which the client has to choose from, helps them in selecting their price range and the asset they would like to acquire. To maintain and encourage the agents and the staff to generate high quality clients, it provides them with high incentives at the end of each successful rental cycle as well as on completion of any cash sales, leading to motivation.

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Rent to own has a different approach as compared to the traditional method of lending finance and services, it believe in guiding the client throughout its selection process as well as training them for maintenance and proper utilisation of their resources. Rent to own has a very positive and comprehensive approach towards its clients. It has three micro-asset financing products until now:

Cash Purchase- first is simple cash payment for the equipment as mentioned in the catalogue, where the client pays 50% of the amount and has the asset he would like to purchase and it would get delivered to his home.

Short-term Rentals: The client may choose the asset or the product it may like to acquire by paying only 15% of its purchase price as down payment and the rest of the amount on a rental agreement which is to be paid in 5months at 20% interest rate. At the end of the agreement the customer becomes the owner of the asset, it gives feasibility to the customer to start using the asset as soon has he makes the down payment and start generating revenue for paying the rentals.

Long-term Rentals: The same way the client chooses the equipment it likes to acquire and pay 20% of the purchase price as a down payment towards the asset and pay the balance by getting into an agreement to pay the rest of the amount in 10 monthly instalments at 30% interest rate. After the payment of the instalments the, client becomes the owner of the asset. This gives the clients flexibility in terms of payment of the instalments over a longer period of time as well as commencing work with the newly purchased asset.


The success of a finance company depends on the success of its clients and customers and it is rightly supported by the Rent to own and its clients. It has a holistic approach towards micro financing their assets; they work with clients to gain the highest business potential. They target on achieving high productivity and a prosperous future for its clients. Rent to own finances its clients who are growth oriented business people who have a aim to work hard and achieve to their maximum capacity of the assets they have taken from Rent to own. Rent to own is one of the biggest factors or reasons for their access to equipment, as well as the financial and the technology support provided by them which has lead their clients to embryonic potential. To safeguard their finances Rent to own finances only these types of clients:

Farmers on contract (Small scale): These farmers produce cash crops like peanuts and corn. They have regular and long term relationship with their buyers and hence they have a secure market and guaranteed return.

Non Contract farmers (Small scale): These farmers also grow cash crops but do not have a guaranteed buyer. These sort of farmers often require irrigation, processing and transportation equipment's.

Micro and Small Enterprises in Rural Areas (MSEs): Having a small business often working in food processing, welding and carpentry work. They require equipment's which work on solar or diesel equipment's or any other source of energy.

Micro and Small Enterprises in Urban Areas ; They are urban businessmen who are typically involved in food processing businesses, these entrepreneurs regularly require cooling equipment's like deep freezers to keep their food fresh. These business also require computers equipment's to have a support at their back office.

Other Business Details

Rent-to-own Africa also has an option of investing in the business which has high returns, and with the progress and the achievements earned in the short period of time; the organisation has met its needs for the short run. In 2011, Lundin for Africa, one of the organization run by the Lundin Group of companies, has invested USD $ 175,000 as a combined equity and debt capital in Rent-to-Own. The foundation believes in the new upcoming entrepreneurs in Africa by investing finances and giving technical assistance to Mr Hemsworth organization. With the huge investment, Lundin foundation has now become a lead investor for next 4 years, it just shows the amount of trust Lundin foundation and the Lundin Group has in Rent-to-Own.

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It also accepts donations and grants which has been helping them since 2009, with the initial help from engineer with border (EWB). Through internal sources as claimed, that a United States Agency for International Development (USAIDS) has recently granted a million dollar fund to Rent-to-Own for Research and development (R&D) and Business expansion. This huge contribution made by USAIDS would help Rent-to-Own by adding more innovation and expanding there spectrum of financial services. With the huge contribution done by USAIDS in rent-to-own, in just a span of 3years shows the amount of growth and confidence it has created in the Market for donors as well as Investors as seen.

Management problems

Lack of infrastructure

Rent-to-own operates in a very rural area of Zambia, it is very underdeveloped place and there are loads of infrastructure problems, like lack of good roads, proper medical health, schools, drainage system etc. These are some primary factors required for running a proper business, which lack in the area where Rent-to-Africa Operates

Assurance of recovering the loan

Loans provided by rent-to-own for the purpose of purchasing productive assets is a high risk business, providing funds to the right person is most important factor. Determining the credibility of the person is very important before financing the person.

Shortage of high Quality staff members

Another problem faced having skilled and professional help, though rent-to-own has its own team of people who work, agents who have incentives for getting credible clients, but do not have the high quality of man power to calculate the exact credibility, professionally.

Work on predictions

A lot of the business plans and finances made by rent-to-own are on predictions and It is a dangerous tool when working on assumptions, there needs to be more assurance being a finance firm.

A lot of risk involved

A financing firm always has risk involved, with financing clients with low credit worthiness in a place like Zambia involves a lot of risk. Supplying assets like irrigation pumps, tractors etc. at a subsidised rate as well as financed.

Creating funds

Rent-to-Own needs a lot of funds for its development and growth, it is the chief source required for running the organization, despite of the investment made by Lundin Foundation and the donation given by United States Agency for international Development, it still needs more fund to increase the operations and Development.

Creating awareness

In the rural parts of Zambia requires a lot of awareness to be created about rent-to-own as an organisation which is there to help in terms of productive assets and financing every field of business, with lack of infrastructure and lack of funds, creating awareness is one of its primary tasks. This would inspire young entrepreneurs to start believing in their ideas and work on them to succeed.

Building confidence amongst clients and businessman

It is important for rent-to-own to build confidence amongst the existing businessman and the upcoming young entrepreneurs. Trust should be created in the market that the organisation is there to help them and to secure a better future for the generations to come.

Allocation of funds in the right place

The funds received from various investors and donors should be invested in the right place for the right purpose for maintaining the trust of the people who believe in the organisation. Finances should be given only to people who require the same and will spend the money responsibly.

Unpredictable future

Rent-to-own helps its clients by providing them with long term assets as well as plan the business for them too. These Business plans are made on unpredictable assumptions made by the organization. Natural Calamities or any other incidents which will happen in the future cannot be predicted therefore accurate business plan cannot be created.

Research and development

Rent-to-own required more funding for research and development to be done in the market. Rent-to-own requires a lot of market research for helping them to create a more sustainable business plan.


As per the problems faced by rent-to-own I would like to suggest changes made in the Human Resource Management (HRM), HRM is the process of acquiring, training, appraising, and compensating employees, and of attending to their labor relations, health & safety and growth. The organization needs to develop their Labor to a more skillful level and it would help them in achieving the goals it with more precision and accuracy. The main functions of Human Resource management are:

The procurement function- obtaining of a proper kind and number of personnel necessary to accomplish an organization's goals.

The development function- personnel development of employees, training.

The compensating function- securing adequate and equitable remuneration to personnel.

The Integration function- an "integration" of human resources with organization through job enlargement, job evaluation, variable compensation plans, disciplinary action programs.

The maintenance function- maintaining the physical conditions of employees (health and safety measures) and employee service programs.

These functions will help rent-to-own overcome the problems faced, the goals of the organization are very clear, for the welfare of the rural are it is very important to have the right person at the right job, like an analysis done by a professional for more accurate results. The development of the staff and labor working in the organization, making them more competent and giving them the required skill training for able to take the right decision required in the given situation. The compensating function, one of the function which rent-to-own has been performing well by giving rewards and incentives to the agents and the staff who are getting valuable clients. Integrations of Human resources will help rent-to-own to a great extent, as I will help rent-to-own to recognize the contribution made by each staff member and create more discipline amongst them. The Maintenance function is another important aspect needed to be covered. Health safety and hygiene factors need to be considered, working in a rural environment, it is very important to maintain the physical condition of the employees.

Apart from the Managerial functions and decision the organization should also keep in mind about the several factors which would influence the outcome of the firm:

Human Resources are heterogeneous: Different people, different personalities, different needs, attitudes and values.

Human resources are dynamic and behave differently. (They react to the same situation in quite different ways).

HR is the most important element in an organization. The effective utilization of all other resources depends upon the quality of HR.

The term HR is wider than the term Personnel. HR includes all dynamic components of all the people at all levels in the organization, whereas a personnel means the employees working in the organization.

These points need to be considered widely before making any changes and results to be achieved. These Implications will help rent-to-own in attaining well trained and motivated employees working towards a common goal. By training the staff members it would contribute more towards higher efficiency and effectively, job satisfaction can be achieved through encouraging and assisting, it is not always about monetary terms, even other emotional supports helps a lot of the employees to work at full potential. Having mutual respect and understanding will help more co-ordination and facilitate results. I feel these implications would help Rent-to-own to a large extent on achieving the Goals set by Mr. Hemsworth.


After analyzing the Organization Rent-to-Own Africa, we can see that the Business Development organization has been achieving success and support from other foundation for the welfare of the people of Zambia. It has further plans to grow worldwide in the long run. For creating a bigger impact it still needs to overcome its problems and need to solve them in due time with proper Human resource training and development. Certain actions from the Management will help in the long run and get the finest results.