Bicycle Factory Chapter 3: On the Trail of Welders

(This is part of a multipart story. To start at the beginning, please go here: http://cheetahdevelopment.blogspot.com/2009/06/bicycle-factory-chapter-1.html)

Well, I had stopped at Wonder Welders, was impressed with their art and their work, but not their welding. In fact, I had looked at welding all over Tanzania and it was often very poorly done, including on the few locally made bicycles. I asked Elly Kay, the director at Wonder Welders if she had further ideas about where I might find good welders. She said sure, right down the street, just go and ask for “fundi Peter”. ‘Fundi’ is the universal Swahili term for ‘technician’. It can apply from everything from a traffic cop, to a cell phone seller, to a welder.

So I went looking for fundi Peter. This street specialized in a variety of construction related trades. The one that broke my heart were men, many women and a few children breaking stones down into gravel. Piece by piece. Some with hammers. Some with bigger stones. They sat in the gravel and pounded the rocks between their legs without masks or gloves. I wasn’t able to get a good picture because taking pictures of people needs to be done with permission. But you can get the idea in the picture below.


I found fundi Peter. His carpentry and welding shop provides a variety of goods from bed frames to cabinets to metal trusses. (See a picture of his shop below)

The welding was great. It turns out that Peter has a ten year history of teaching welding at a vocational school called Don Bosco, right around the corner.

Not only had I found a welder, I found one that could keep a factory stocked with quality welders who knew what they were doing.

I talked to Peter and another partner that was there. Since then I’ve had two meetings with them; there are four partners in all, with Peter as the chairman. Our discussions have been very interesting.

When Cheetah invests in an entrepreneur, we need their all. Starting small businesses is very difficult work. Even in the USA, according to the SBA, about 80% don’t survive the 10 years, with 25% failing in the first year. So we need our entrepreneurial partners to be fully interested in making a success. To make sure of this we apply several methods but the two most important is to make sure they are focused on the business and that they provide part of the investment.

Providing part of the investment is not so much about how much money they are contributing, but that they are putting themselves meaningfully at risk. Cheetah won’t take a risk if they won’t. This keeps incentives aligned for success. Sometimes the risk is less about money than other things, like leaving a good job, committing resources, or pledging other assets.

One of the problems with this group of entrepreneurs is that they wanted to keep their existing business going along with joining the bicycle factory. They have a reasonable perspective: they want something to come back to in the event of failure and they want to make more money on the side. But it probably dooms the bicycle factory. The core work force cannot have another major project going on the side.

So I told them the story of the Spanish explorer, Hernando Cortez seeking to conquer Mexico. His problem: his men thought maybe they should return to the comfortable home in Cuba instead. When he landed in the Americas he told his troops to burn the boats. There was no going back. They were going to find a way forward.

“Burn the boats!” This has become part of every conversation with this group of entrepreneurs. They got it. So have I. Now we need the help of hundreds people like you to find the way forward.

Since Don Bosco was right around the corner, I left fundi Peter and his partners and went straight there for a reference. I got a very good reference from the headmaster. I think we’ve found the start for a bicycle factory operations department!

To continue the story of the bicycle factory go here: http://cheetahdevelopment.blogspot.com/2009/06/friday-find-don-bosco.html

Here’s a picture of Peter (left) and one of his partners, Geofrey.

Edgar Nkunda, Chapter Two: Dreams and Visions

If you haven’t read Chapter 1, please back up and do that here: http://cheetahdevelopment.blogspot.com/2009/06/edgar-nkunda-chapter-one-lacking-bus.html)

I have received many emails asking that the next part of the story of Edgar Nkunda continue. Many are interested in hearing what are the dreams and visions of this remarkable young man.

Edgar has been put in bondage to money lenders and has little direct control of his own future. Even so, he wants to leverage the little he can control to raise the hopes of many people. His dream is to make many dreams come true. He is not very worried about making money himself.

Edgar is a man with a high-school diploma who thinks deeply and dreams big.

His plan is multi-layered and very achievable. With it, he can change the lives of hundreds and probably many thousands of families across Tanzania, to bring them a hope and a future.

First, Edgar wants to start using Tanzanian grown cotton. It is of very high quality and little of it is being used within Tanzania. In fact, having personally spoken to cotton farmers, finding a market has been difficult. By using local cotton, poor farmers can have their income raised. According to Edgar, since the local fabric industry is dominated by Indians, they are importing cotton from India and China where they have syndicate arrangements and are bypassing local suppliers. Edgar is unable to use local cotton because he is in bondage to an Indian money lender who provides the only cotton he can get.

Second, Edgar wants a bleaching machine. With this, he can take his ‘gray fabric,’ which is a natural tan color and bleach it for direct sale. The local Indian controlled fabric syndicate that bleaches Edgar’s fabric does not provide fabric to the local traditional dying shops. These shops produce gorgeous hand-made pieces of fabric that are highly valued here and in the world. They Indian syndicates don’t want the competition. Instead, they produce high-volume knock-offs. With these sales, many small businesses will be allowed to succeed across Tanzania.

Third, Edgar wants to continue to buy used fabric looms from around the world, which are available at a very low price. He wants to set up an arrangement where he would lease-to-buy four machines at a time to local entrepreneurs – within his factory, solving all kinds of infrastructure problems for them at the same time. It was his dream to have a textile factory. He has one. Now he wants others to have their dream come true to own their own business. Instead of trying to become a textile mogul (a big potato!) he wants to help lots of people succeed, creating an arrangement where joint capacity benefits many rather than a few. I think you know see why I ask people to tell me of their dreams and visions.

Edgar is a creative man, with big dreams and an even bigger heart.


Learn the lesson of Edgar. For the past several months, in both the USA and Tanzania I have found myself talking to people who feel powerless to change the world around them. No one is powerless. Learn from the man who had no bus fare and bought a factory. Learn from the man who remains in bondage to money lenders and is working to free others rather than himself. Use what you have been blessed with and do not wait. Learn from Edgar.

Dreams and Visions

When I meet with entrepreneurs, they are often surprised by the conversation. First of all, culturally, they expect successful business or other people to be aloof and brusque. In the local vernacular they are called ‘big potatoes’. After viewing my card, one young man highly doubted that I could be the Executive Director of Cheetah, because I was talking openly to him.

Secondly, they are surprised by the amount of time I am willing to spend. As both a big potato and a mzungu (white man) they expect me to be quick and take little interest. But my meetings usually last more than two hours and have sometimes gone for five. Although most people are very open, it takes this long to get past formalities and to allow for real conversation. At the end of the day, working with the right person is the most important ingredient to a successful business.

Thirdly, they are surprised by the line of questions. I don’t just visit their factories and review their financials. I ask detailed questions about their history, their families and their dreams. These questions are surprising and the candor that they have is very heartening. This is my approach to getting to know someone.

You can learn much about people’s values by asking about their family. The challenge of lifting up the next generation is much more acute here than in the west. Family values tend to be less appreciated by men, keeping children healthy – surviving to age 1 – is very challenging, and education is expensive.

I love to hear the history of their businesses! Not only do you learn about the way that they confront challenges, the story is often quite moving. (See the stories of Anna Temu or Edgar Nkunda, for examples.)

(Above picture by Lonnie Menard, © 2008, taken in Tanzania)

Finally, I want to hear what are their visions and their dreams. First of all, this is Business 101. If you don’t have a direction, you can be sure of arriving nowhere. Too many businesses operate on the principle of ready, fire, aim.

Secondly and more importantly, knowing a person’s dreams and visions is a matter of their heart. As an experienced business person I can often see quickly many of the things that are required to help their business succeed. For some people, what they want is to be a big potato that bosses people around; this is their definition of success. For others, it is to create future opportunities for their children, or a steady income to raise a family, or a desire to make an impact in their world. Their definition of ‘success’ may be completely different than mine.

Whether Christian or not, most people recognize that Jesus had remarkable wisdom. Just as I can quickly evaluate a business, the stories of Jesus show that he did this with the people around him. His insight was very deep and went far beyond the surface. For example, he chose a fisherman to lead the founding of his new movement – not a choice that would appear to wise but look how far it has come. When people came before him, often seeking advice, he did not tell them what to do. Instead, he dealt with their hearts.

Most people here automatically respect me because I am mzungu and a big potato. Their culture has deeply ingrained them to show much respect and seek my advice (especially when I am mzee – their elder). A prior history of socialism has taught them to expect central planning. A history of colonialism has shown them that this is what mzungu will do – insist on their own way. Therefore, they most often want or expect me to tell them what to do.

For me this is the challenge. It’s tempting to play the big potato and show one’s knowledge. It’s better to find their heart. This is where life (and so business) begins.



…I promised to tell the dreams of Edgar Nkunda – and many are writing and wanting to hear them – coming soon!

Edgar Nkunda, Chapter One: Lacking Bus Fare, He Bought a Factory

I was introduced today by the University of Dar es Salaam to a man with an amazing story. Actually, I think most everybody in the world has an amazing story if only you can take the time to hear it. But some stories are remarkable in unexpected ways.

Edgar Nkumbe grew up in the fabric weaving business. As a child, his father had four automatic weaving looms. Four is a good number because one person can keep four machines running by them self.

Edgar finished high school in 1992 and became a door-to-door sales person. Then in 2005, he learned of a textile factory that had failed and was selling its machines. He thought that he would go and see if he could afford two machines. After all, machines are often sold merely for scrap steel prices in Tanzania. It seems that he set his sights low. After all, he was going for only half of a full complement of four. And this was more than hopeful for he didn’t even have bus fare to get there and back.

After explaining his interest, the owner asked if the price was low enough, would he buy all sixty machines. Undaunted, Edgar said yes and after the appropriate long negotiation they agreed on a price of 16,000,000 Tanzanian shillings (tsh) or about $13,000. He also had just 16 days to raise the money or the deal was off.

He talked to his father and they decided to ask family and friends for help. After many meetings, there was a strong consensus: there was no interest and they thought he was a bit crazy.

Then Edgar learned of a government organization called SIDO (Small Industry Development Organization), kind of a Tanzanian SBA. SIDO operates industrial parks and gives small loans to businesses. They agreed to give him space in an old factory for about $100 per month and a loan for 16,000,000 tsh. Processing the loan would take some time though. With just hours to spare, he returned to the seller with a permit showing his use of the space and a copy of the loan application. He got the grace time he needed.

When the loan came through, the seller’s patience was thin. He needed to get the machines moved. They are big and heavy and require forklifts and trucks to move. The cost, 3,000,000 tsh. This time SIDO said, ‘no.’ But dad had an idea. Maybe this time family would say, ‘yes’ to a small amount. They asked the moving company if they would take a down-payment to cover fuel, and a loan on the rest. 10% down was acceptable and family decided to help. The machines were moved. This was July, 2005 and 3 months later, Edgar had repaired and powered up two machines.

I was ready to breathe a sigh of relief. –But too soon!

A machine goes through 1,000,000 tsh of yarn per month to keep it in operation. Edgar pleaded and SIDO agreed to fund just a one month supply for one machine. With this, Edgar made some sample weavings that he took to fabric companies and achieved his first order. His problem was still the same: he couldn’t afford the materials to fulfill the order. The company agreed to provide the yarn and pay him the difference when they bought the finished fabric. For three and half years, Edgar has operated in this fashion.

I breathed a sigh of relief. Success at last!

But as I dug further, I learned a disturbing truth.

The buyer has shrewdly refused to supply Edgar with enough yarn to operate all 60 machines, though Edgar has repaired them all and they are in good working condition. By doing so, Edgar’s factory never becomes profitable. Instead, the buyer supplies Edgar with enough yarn to run 24 or 25 machines for just one shift, the threshold to pay his employees and rent but never turn a profit. This is less than ¼ of his capacity. Moreover, the buyer dictates the price he will give for fabric. Worse, all of the books are kept by the buyer. Could it get worse? The buyer never pays for an order in full but instead it is the buyer who supplies the cash to make any other payments such as rent or payroll. Edgar doesn’t have a bank account and literally is at the mercy of this buyer. As long as Edgar cannot afford his own yarn, he has no options. He can’t go elsewhere because nearly all of the fabric buyers are Indian and it is alleged that they commonly practice price collusions and syndicates within Tanzanian industries. This is fully Edgar’s belief.

The problem is not just business collusion. Money lending in this way is a practice common in the third world. Through arrangements like this, informal lenders take all of the profit and allow only enough to the worker to keep them alive and serving the lender. Right now, Edgar is essentially an indentured servant with seemingly no way out. This resourceful man has been caught in a trap. He doesn’t even know what his balance with the lender/buyer is – whether he is ahead or behind. This condition has now persisted for three years.

He is so ensnared that he had difficulty imagining running his business without it.

What he needs is some basic working capital to buy an inventory of yarn. This is a low risk investment with quick returns that will change many people’s lives. And the capital will come with business guidance from Cheetah and the University of Dar to get his business in working condition.

This is the work of Cheetah.

When I parted with Edgar, he gave me one of the first two samples of fabric he had used to start his company. I felt guilty to leave with this keepsake but he insisted. I finally accepted it believing that you, dear reader, will stand with us to buy Edgar his freedom.

(Above, a picture of one of the two original samples that Edgar created to start his company. It is laying on a piece of "gray fabric".)

Next chapter: Edgar Nkumbe’s dream. You won’t want to miss it. It’s as remarkable as his story. Go here to continue:

http://cheetahdevelopment.blogspot.com/2009/06/edgar-nkunda-chapter-two-dreams-and.html

Bicycle Factory Chapter 2

(To start this story at the beginning go to http://cheetahdevelopment.blogspot.com/2009/06/bicycle-factory-chapter-1.html)

I want to tell at least one of the business stories in enough detail that there is a sense of how these things might develop and proceed. Of course, every story is unique but I don’t have the time and chances are neither does the reader, to hear them all.

Anyway, taking up from the last chapter…as my time to travel to Tanzania neared I was introduced to Chilwa Kiliaki. Chilwa is a woman who is a key policy maker in the Tanzanian central banking institution. She is full of energy, exuberance and joy. Her arrival is accompanied by a flurry. We were speaking on the telephone across many time zones and I was describing the Cheetah project to her. She asked what were some of the business ideas in which I was most interested. As I listed some off, she interrupted me with a burst of long laughter and then said, “Now I know you are directed by God because you are talking about bicycles.”

Well, I had not claimed to be directed by God and so this was her own conclusion. She said that she needed to tell me her own story: She was dreaming of starting businesses, especially in rural villages to help people. She wanted to start in the place her father was born and spread from there.


(In the picture above you see a store on wheels, selling rat poison. Stores like this are common. It had a continuous playing announcement. Notice the condition of the chain. The bike is now pushed everywhere it goes but it is still invaluable to its owner.)

Chilwa's thought was to open bicycle shops to sell to farmers because they can have such an impact on their lives. Three weeks prior she had been sent by the Tanzania government to China to study their economic policies to see if any might aid growth in Tanzania. While there, she visited Chinese bike manufacturers and shops to learn as much as possible.

When she returned she commissioned a report on the Tanzanian bicycle market. This is an important subject because bicycles can truly help to fight poverty. She said when I would come to Tanzania I would receive access to this report. For a company entering a market like this, such a report might be a great help. What an amazing ‘coincidence.’


Displayed prominently on her desk is a cell phone holder in the shape of a bicycle.




In her family room:




Eventually, she invited me to stay with her. Here is the light fixture in the room I am staying:





Chilwa said that these were chosen for their colors years ago, and she didn’t even think of them as bicycles until I noticed them.

...almost as if there was a plan ahead of time. (Ephesians 2:10)

(Story continues here: http://cheetahdevelopment.blogspot.com/2009/06/bicycle-factory-chapter-3-wonder.html)

NICO, First Among Tanzanian Public Companies

This past weekend I had the distinctive pleasure of meeting Mr. Felix Mosha, Chairman of the National Investments Company Limited (NICO). (Please see his picture below.) In the background you can see a picture of the highly respected President Jakaya Kikwete, whose picture is featured in most businesses that you enter.

Understanding a little about NICO provides insight into Tanzanian business. NICO is the only Tanzanian owned company in the Tanzanian stock market. There are six companies in the stock market.

NICO has taken on the very ambitious and important work of trying to acquire interest in or developing Tanzanian businesses, especially those that were previously government owned or are connected to national resources. They want the Tanzania people to have a say in how their own natural resources are developed. You can learn more about NICO at http://www.nico.co.tz/.

Thank you Mr. Mosha for taking time with me.

Business Development Prospects Currently Being Studied - June 2, 2009

Everywhere one looks in Tanzania there is business opportunity. Why aren’t they being developed? It takes money (and knowhow) to make money. To learn more about this aspect of our effort, go to our website at http://www.cheetahdevelopment.com/. Anyway, here is the list of business development ideas that are currently being considered:

1. Print Shops in Rural Cities
2. Electric Motor Rewinding
3. Bicycle Factory
4. Sunflower Seed Oil Operation
5. Canning Factory
6. Chicken Operation
7. Meat Processing
8. Agribusiness Processing Grains to Healthy Foods
9. Roofing Tile Business (see picture at left)

It ought to be interesting to see how this list changes over the coming days and weeks.

We are particularily interested in agri-business because it not only creates jobs, it feeds people, and it affects the income of the 80% of people who are subsistence farmers.

Elephants may have great memories but I'm taking copious notes. By the way, many of the best animal and scenic pictures you see were taken by Lonnie Menard when she was in Tanzania. Thanks, Lon.

Bicycle Factory Chapter 1

This is the first installment in what hopefully will be a long enduring story.

In my first visit to Tanzania a year ago, I thought about possible businesses that could be started. One of my first ideas was a bicycle factory. Bicycles are very common here – but not nearly common enough. It is the transportation mode that most people aspire to have. Bicycles are not just for personal transport. They are trucks, taxis, and often key to a person’s livelihood. You can see them on many highways where even 10 miles from the nearest town there are many people riding – but also many people walking.

I lodged this in the back of my mind for many months.

Now fast forward with me to early in 2009. I had been introduced by Scott Hillstrom to a Jake Chaya. Scott had not given either of us a reason to meet but Jake said that he had known Scott for 20 years. Jake conveyed that Scott had perhaps even a spiritual gift for making introductions that were important. I believe this can be true because I have seen how Cheetah’s very existence has depended time and again on being introduced to the right person at the right time.

As Jake and I share our respective stories, I found that Jake had many projects going both in the USA and in the developing world. One of these was particularly interesting to me. Jake is involved in an organization that is working in Rwanda (adjacent to Tanzania on the west). This group (http://www.projectrwanda.org/) is working on delivering three wheel cargo bikes to poor farmers. They have created a solution that involves setting up bike shops with trained technicians, tools, inventory and parts – almost a franchise model. Then they have partnered with a microfinance organization that finances the bikes. (If you don’t know about microfinance, go here: http://en.wikipedia.org/wiki/Microfinance.) They are now selling many bikes; if I have my numbers straight, more than one per working day per store.

But according to Jake, Project Rwanda has a problem. The bikes are imported from China and are of very poor quality. China produces varying degrees of quality: one for the west, which is the highest standard, another for their own consumption and a third for the third world, which is very poor. As has been described to me, they look beautiful and shiny but the paint rubs right off and the frames fall apart. I have verified this with people in Tanzania.

Jake assures me that Project Rwanda is looking for a new source and they would prefer to by African, especially locally. Besides the poor quality, the cost of shipping the bikes from China is almost equal to the cost of the bike. This shipping problem is a built in protection for locally produced goods. Many products that are bulky and lack special technology or sources enjoy this benefit. Think of toilets, furniture, bread, etc. as examples.

But it got better. Project Rwanda has already had a cargo bike designed by an American bike designer and a prototype built.

‘Bike factory’ was moved from deep in the mental recesses to one of the most interesting ideas to consider.

(Story continues here: http://cheetahdevelopment.blogspot.com/2009/06/bicycle-factory-chapter-2.html)