Unlocking the Potential of Rural Entrepreneurs in Zambia with Solar Irrigation Pumps

Shell Foundation's portfolio company, Rent to Own (RTO), is a for-profit social enterprise pioneering productive asset financing in Zambia. RTO has disbursed over $4 million in productive use assets to more than 7,500 Zambians.

Rural Zambia is absolutely teeming with entrepreneurs. Hard-working, creative, and resilient, they are often seen as the key to unlocking the country’s vast resources and catalyzing its economy.

The majority of entrepreneurs in Zambia are smallholder farmers, or “agro-prenuers”. They work their small plots by hand or with ox-drawn implements. When conditions are favorable and buyers exist, they are able to take surplus production to market and generate a small income.

While brimming with entrepreneurial grit, they are currently hampered by two major factors that make them unable to grow their businesses and ultimately improve their quality of life.

The first is climate change. Across all regions of Zambia, rainfall patterns are becoming increasingly unpredictable. This not only makes it difficult for smallholder farmers to correctly time the planting of their crops, but also increases their vulnerability to unforeseen periods of drought. Given the cyclic nature of small-scale farming, a single bad season can render a farmer unable to purchase seed and fertilizer in the following year, and hence a vicious cycle of poverty ensues.

The second is lack of access to credit. Without credit, agro-preneurs are unable to purchase the equipment and tools they need to mitigate the impacts of climate change, increase yields, and ultimately improve their income and livelihood.

Rent to Own (RTO), founded in 2010, is a for-profit social enterprise that has been steadily and successfully tackling the latter of these two challenges for the past 8 years. Viewed as the regional pioneer in productive asset financing, RTO has developed a unique model whereby successful applicants receive a productive-use asset after providing a small commitment fee. Clients then use the asset to grow their business, generate an income, and pay back the company in monthly installments. The “all-in-one” package offered by RTO includes not only high-quality equipment and uncollateralized financing, but also delivery, training, and after-sales service. In addition to smallholders requiring basic farming equipment, the company serves shopkeepers requiring refrigeration equipment to sell perishables or cold drinks.

The company’s model is designed such that the incentives of RTO and its clients are closely aligned; when clients get the most out of their assets, they can make payments on time. This, in addition to the “end-to-end” service model, have enabled RTO to achieve an exceptional 97% repayment rate since inception. To date, RTO has disbursed over 4 million USD in high-impact assets, empowering more than 7500 rural Zambian entrepreneurs.

In the last two years, RTO has also tackled the first major obstacle facing smallholder farmers, climate change, by adding solar-powered irrigation pump kits to its product portfolio. These pumps enable smallholder farmers to irrigate their fields year-round, thus mitigating the adverse impacts of seasonal income and erratic and unreliable rainfall. Because the pumps are submersible and solar-powered (and the sun always shines in Zambia!), the cost of fuel is not a factor, nor are the transportation, storage, and security concerns that come with traditional petrol and diesel pumps.

Since 2016, RTO’s solar portfolio has grown from 5 to 50 percent of sales, driven mainly by the introduction of solar pump kits to the catalog. RTO offers a variety of pump sizes to cater to the diverse circumstances of its clients and works closely with each entrepreneur to understand his or her unique needs and ambitions. At present, RTO’s best seller is a 300-watt model that can deliver over 10,000 liters of water per day at 25 meters of lift. The reduced operating costs of the pumps have also intrigued a wide variety of clients, from livestock producers to schools and residential communities.

Training and after-sales service are critical to the success of RTO’s solar pump clients, and hence the company itself. “Very simple issues, such as a sensor getting stuck, can easily be fixed by a client who has never had a solar product if they are properly trained,” says Clemency, a Field Lead at RTO, “This prevents them going days without water and saves me a 50 km trip. I can even trouble shoot with the client over the phone once they are trained on the basics.”

As various pumps sizes and tools like smart metering become increasingly more available and affordable, RTO sees the opportunity to make an even bigger impact on the lives of rural entrepreneurs. The company is currently exploring opportunities to bundle solar pumps with farming inputs, use the pumps as collateral to provide additional assets, and target new types of entrepreneurs such as lodge and car wash owners.

“A solar irrigation pump is an exciting first step for smallholder farmers on their journey up the productive use asset ladder,” says Jeffrey Scheidegger, RTO’s CEO. “RTO is incredibly excited to deliver technologies to agro-preneurs that are truly life-changing, and that, until recently, they could only dream of owning.”