Prosper on Farms does not give loans; use installments, lay-by, microloans, or Pay As You Go models. Prosper uses a no-pay model, which means farmers do not pay money to Prosper on Farms to have irrigation. All the farmer has to do is to meet our agreed production targets under our contract farming agreement in order for them to eventually own the irrigation system.
LOANS
Prosper on Farms does not give loans to farmers because we do not want to put farmers in debt, EVER.
In India, farmer suicides are the highest in the world, and they are over debts. A farmer must farm without feeling so much pressure to repay a loan.
Loans also need collateral for them to be safe to the lender, and most farmers in Zimbabwe and Africa do not have valuable collateral.
It must be the Bible which says a borrower is slave to the lender. We don’t want slaves.
We do not even like 0% interest loans. A loan is a loan and it still has to be paid back. You will always have that burden of having to pay it back, and it can give you unnecessary stress that is not good for your health.
INSTALLMENTS AND LAY-BY
Loans also have installments, which is another thing we don’t like. The nature of agriculture is such that sometimes a good 150 days will go by from planting to harvesting, and then maybe even a good more 60 days before finally selling the crop. How then will the farmer be able to pay in installments? It’s just not practical and unnecessary. We want farmers to feel completely free farming, farming with peace of mind. We all work best when we are under minimum stress.
MICROLENDING
Microloans of the type that Grameen Bank is famous for have their place but they are just not our thing. Microloans come with interest, and we do not want to give farmers loans and also charge farmers interest on those loans. The Grameen Bank model is very successful, with a very low loan default rates, much lower default rates than Zimbabwean banks that are lending to farmers. Loans are not our thing.
The other problem with the Grameen Bank model is that it uses group-lending, a feature which could cause social conflict that could last for generations in communities if something goes wrong. Microloans keep you micro. We want to give farmers something that makes them prosper and grow. We want our farmers to be able to buy cars and even tractors on their own, thanks to having got assistance from us to kickstart irrigated commercial farming.
In Zimbabwe microloans have the highest interest rates like you have never seen. Their interest rates are higher than those of banks.
We don’t want to be a financial institution, no, we want to be a food production engine and farmer prosperity engine rather than a lender of money. Banking is not for us. Money is boring, but food is interesting.
BUY NOW. PAY LATER.
The buy now pay later (BNPL) model is all the rage these days in investment circles.
Why buy? Why even pay? Prosper on Farms’ model is don’t buy, don’t pay, just have it, produce, and you will own it.
African farmers have unique challenges that “buy now pay later” cannot solve.
Imagine we give farmers irrigation systems and let them pay us after the harvest. That will not work. We will go out of business. They are already failing to repay bank loans. Proof that that model doesn’t work. The challenges that a farmer will have range from personal to business challenges such as value chain challenges and supply chain challenges. For instance, the farmer may not have a market. The last thing we need is to visit a farmer who has not yet repaid a loan and find that the farmer did not have a market at all in the first place and all the crop is now rotten. Prosper on Farms uses contract farming to avoid such problems. The farmer just produces on the farm, and we provide assistance the farmer requires, such as irrigation, and inputs support and a market through a partner contract farming company or buyer. It doesn’t get simpler than that.
PAY AS YOU GO
There are many pay as you go solutions in Africa. In the irrigation space, most pay as you go solutions in Africa are for small farms that are less than 1 hectare, usually less than 2 hectares. The solar-powered pumps that are sold on a pay as you go model recover their costs through mobile money payments. The pay as you go model is prepaid, which is a barrier to access productive assets for those who do not have the money to prepay to use the asset for a short time at a time. In short, prepaid or pay as you go is for the rich.
Not only that, pay as you go irrigation has the problem that when a farmer’s crops need irrigation the most, that may be when the farmer does not have money and while the farmer will have the solar powered water pump, the pump will not pump any water until the farmer has paid the money. Meanwhile, the solar powered pump will be just lying idle until the farmer has paid money, just like with prepaid mobile airtime or talktime. If the farmer has no money at that point, the farmer is required to take out a loan with the solar pump supplier.
Investors love pay as you go.
We don’t work like that. We can’t work like that. We are pro-farmer and we want farmers to prosper. We are not selling devices or gadgets, but prosperity. We do not measure our success in terms of units sold, but in terms of farmer incomes, yield improvement, production increase, and agricultural productivity and harvests.
Pay as you go sells the thing, a device, but it does not lift a farmer out of poverty.
Our approach ensures that Africa does not go hungry because whoever we give an irrigation system must be productive to ultimately own it. We do not require money from farmers, just production. We are not selling irrigation systems, but increasing African food security and self-sufficiency through giving farmers irrigation systems without requiring any money payments from them.
PHILOSOPHY
The philosophy of Prosper on Farms is like that of the Parable of the Talents that Jesus told in the Bible (Matthew 25:14-30). It goes something like this.
A long time ago, before leaving his house on a journey to a far away land, a master called his three servants and gave them all some money, coins, based on their ABILITIES. The first servant got 5 coins, the second servant got 2 coins, and the third servant got 1 coin. When the master returned several months later and he asked his servants how they did with the money he gave them. The first servant who got 5 coins said he made 100% profit, 5 more coins. The master was happy and he said he would promote the servant and give him a bigger role in his estate. The second servant who got 2 coins said he made 100% profit, 2 more coins. The master was happy and he said he would promote the servant and give him a bigger role in his estate. The third servant said to the master that he dug a hole and hid the coin in it because as he said, “You want to make a profit yet you are not the one who will be doing the work, I will.” The master then said to the servant, “Instead of burying the coin in the ground, you could simply have taken the coin to the bank and it would have earned interest.” The master then ordered that the coin be taken from that servant and be given to the servant who had made the most profit, 5 coins. The master, speaking in the old English of those days said, “For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. “
What that means is that whoever is most productive will be given more and he who is not productive will lose everything. That is what we do.
Our philosophy is that we give the farmer what the farmer needs to thrive as a farmer including irrigation, no irrigation loans, no interest.
If the farmer is productive, we increase the size of the contract farming that the farmer can do by increasing the value of the contract and the size of the irrigation system.
A farmer can start with a contract that covers 1 hectare, and if that farmer is very productive, we give the farmer an even larger contract and an even larger irrigation system, for up to 10 times the area they were farming in the previous contract, that means up to 10 hectares. If the farmer does well on that land of up to 10 hectares, we increase the value of the contract again and the size of the irrigation system to up to 100 hectares. Prosper on Farms will own the irrigation system for the length of our contract and will transfer ownership of the irrigation system to the farmer if the farmer meet our production targets within the time frame we agreed to in the contract.
On the other hand, if a farmer performs poorly across seasons or is lazy, we cancel the contract farming agreement, permanently blacklist the farmer and the farm, and ask the farmer to let a more productive farmers use the farm. The farmer then undergoes paid on-the-job training under that productive farmer. When that productive farmer has met the production targets, the farmer who owns the farm gets to keep the irrigation system.
If the farmer is unhappy with that arrangement, we will remove the irrigation system and relocate it to the farm of a farmer who is far more productive, just like in the Parable of the Talents. In the case of a borehole-supplied irrigation system, we remove everything, even pumps and solar panels, and leave a capped hole and leave the farmer as the farmer was before. In the case of centre-pivot irrigation systems, we remove everything and put it on another farm, then the farmer can try others such as government facilities which are probably 10 times better than what we offer.
When such an opportunity as we give a farmer has been given to you, don’t waste it. We are not a government or a donor.
How can Africa feed itself if farmers who have demonstrated themselves to be unproductive even when given irrigation systems continue to sit on them while those who are more productive even with the little they have do not even have access to irrigation systems? The answer to that is by putting more farming resources to where they will be most productive. No excuses. Jesus showed us the way, the truth, and the light. You all know that I am right.