Microfinance Brings Savings to Customers and Higher Prices to Farmers in Zimbabwe
HARARE, Zimbabwe – Improved cash flow at Ray’s Butchery is resulting in higher prices for rural farmers and more savings for urban customers.
This has not always been the case for this business located in the city center of Zimbabwe’s capital city of Harare. Opened in 2003, the butchery was caught up in the general meltdown of the Zimbabwean economy that peaked in 2008, and has been facing significant financial challenges.
However, thanks to loans from the USAID supported AgriTrade credit facility the business is now posting great daily sales and its highest ever turnover rate. Ray’s Butchery accessed two AgriTrade loans of US$35,000 each through MicroKing Finance. The first loan was disbursed in August, 2011 and, after its timely repayment, a second loan was disbursed in March, 2012.
AgriTrade credit has enabled Pascal Tongowashe’s butchery to offer competitive prices.
By June 2012, Ray’s Butchery had used the loans’ funds to procure cattle worth a total of $171,000 from rural communal areas. High turnover allowed the butchery to refurbish its city-centre outlet and to buy new equipment.
“Because our cash flows are great and we have put in place systems that are benefitting from economies of scale when we buy in bulk, we are able to set lower prices than competitors,” said Pascal Tongowashe, owner of Ray’s Butchery.
While most other butcheries will charge anywhere from $6 - $8 a kilogram of beef, Ray’s Butchery meat ranges from $3.50 - $6 a kilogram. This translates into significant savings for the urban consumer.
The butchery, which has two other outlets in Harare, sells 20 cattle a week and serves up to 300 customers at any given day. Tongowashe buys his cattle from small holder farmers in the communal areas of Muzarabani, Guruve, Raffingora and Mutoko, among others.
“I have always bought from the rural areas, but prior to the loans there were some cash challenges; now I can afford to go out to the rural areas without upsetting our cash flow systems,” said Tongowashe.
The availability of more cash-at-hand for Tongowashe is making him a preferred buyer among the communal farmers, from whom he purchases cattle.
Hondo Derere, a communal farmer from Mbire, Guruve North area, says he only sells his cattle to Tongowashe. “I used to sell at some abattoirs and other bigger commercial companies but have since stopped. I now take all my cattle to Tongowashe. He offers us better prices on the spot and we are able to negotiate with him. In addition, he offers extra services like free transport for our cattle and even feedstock,” Derere said.
Derere claims that now that he has a guaranteed market, he has used the income he made from dealing with Tongowashe to expand his herd. “When I started dealing with Tongowashe more than a year ago I had 35 cattle. Now I have 69,” Derere said.
For the future, Tongowashe plans to diversify from just slaughtering and selling, to cattle fattening feedlots for value addition.
AgriTrade is part of Zim-AIED, which is funded by USAID and implemented by Fintrac. IRD manages AgriTrade under a sub-contract to Fintrac.