Investment Nuggets: There Is Power of Sharing When Connected to An Online C2C Community – A Crowd funding Potential Scenario

Introduction

Some Connections2Communities (C2C) members continue to shy away from wholesale talk using the community vehicle that is right at their disposal.

They rather prefer the conventional retail based conversations which they have learnt over a longer period, and just like any old habits, such a practice does not die easily.

A new normal is upon us, the wholesale means is unarguably faster at reaching several heads that are readily congregated as existing community members, at single post or call of one’s business idea/plan.

The chats:

Following a conversation (cited below at first) between a potential C2C member and Mutumwa Mawere (MM), a brief perusal chat between MM and Brian Tawanda Manyati followed upon, ending with a basic financial literacy illustration:

First is the Nobuhle and Mutumwa Mawere chat (not cut short for reason of finding every detail in the conversation relevant):

[12/7, 12:17 PM] Nobuhle: Good day Mr Mawere…

I am Nobuhle, am a Zimbabwean living in Beira.. I am happy I stumbled onto one of your Live Fb sessions…

[12/7, 12:18 PM] Nobuhle: I would like to learn more about Rice and Anymari..

[12/7, 12:55 PM MM: Thanks.

[12/7, 1:37 PM] Nobuhle: The Basmati Rice Business is appealing

[12/7, 1:38 PM] Nobuhle: Do u think it would be viable to do it from this side..

[12/7, 1:40 PM] MM: What are the prices like per kg there? Do you want to sell in Beira or Zim?

[12/7, 1:41 PM] Nobuhle: In both… Here and in Zim I would sell in Bulawayo to be precise

[12/7, 1:42 PM] Nobuhle: Here… It it 600/700mts per 5kg

[12/7, 1:43 PM] Nobuhle: Let me check how much it is in Zim

[12/7, 2:24 PM] MM: At this price, it may not be worth buying from SA but from Beira and then sell to land locked countries.

[12/7, 3:19 PM] Nobuhle: Yes.. It makes sense…I was attracted by the one from India @R20 /Kilo

[12/7, 3:19 PM] MM: But this is in SA. If you add transport, then margins are eroded.

[12/7, 3:46 PM] Nobuhle: Eish…

[12/7, 3:48 PM] Nobuhle: Maybe I can/should sell in SA.. My daughter lives there…

[12/7, 3:49 PM] Nobuhle: How much is the profit per Kilo

[12/7, 3:52 PM] MM: It depends on marketing. You can make a minimum of R5 per kg up to R30 per kg.

[12/7, 3:56 PM] Nobuhle: It’s not bad if we can push Volumes…

[12/7, 3:58 PM] MM: Indeed. Do you not think that a crowd fund would be better?

[12/7, 3:59 PM] Nobuhle: Yes, I heard u talk about it… I dont know it… How does it work?

[12/7, 4:00 PM] MM: You can invest with others in rice and agree on a return per kg.

[12/7, 4:02 PM] Nobuhle: Hmmmm. Sounds Good… Whats the turnaround time?

[12/7, 4:03 PM] MM: This can only be done when volumes are involved. Do you want to be part of a volume builder?

[12/7, 4:03 PM] Nobuhle: Yes… Whats the minimum Investment?

[12/7, 4:04 PM] MM: What do you want or wish to invest?

[12/7, 4:05 PM] Nobuhle: Say R10000 to start with…

[12/7, 4:07 PM] MM: What do you think about investing in units of R500 each for the Rice Project?  With R10000, you can buy 20 units.

[12/7, 4:09 PM] Nobuhle: I am now getting lost…

[12/7, 4:09 PM] Nobuhle: Am not so good with figures

[12/7, 4:09 PM] MM: This will allow for small investors to also participate.

[12/7, 4:10 PM] Nobuhle: Thats correct..

[12/7, 4:10 PM] Nobuhle: So who gets the other investors

[12/7, 4:11 PM] MM: By stepping forward to do what you have done, you never know who else would be provoked

[12/7, 4:13 PM] MM: It is only people like you that provoke change.

[12/7, 4:15 PM] Nobuhle: Change is needed… Life is soo difficult now…

[12/7, 4:16 PM] MM: Yet knowledge shared is better.

[12/7, 4:17 PM] Nobuhle: Thankyou…

Thank you for sharing… I can see a light at the end of the tunnel

The second conversation is between Mutumwa Mawere and Brian Tawanda Manyati follow up chat in brief:

[12/07, 17:16] MM: What is your personal idea on the idea?

[12/07, 17:36] BTM: On crowd funding in general: It is new to most people in Zimbabwe. What you see with slack in paying subscriptions is exactly what I have experienced on a couple of crowd funding concept attempts, first in the transport sector and second with a hardware business concept. As for coming together upon hearing the proposal, several people would join in, but on asking each person to start with committing USD5 per head, only a few heads would take heed of the call. Even after being availed business proposal documents to first freely read.

[12/07, 17:51] BTM: On crowd funding, specifically on a vehicle such as C2C, which already has structural platforms (though understandably infant) for handling willing crowd funders contributions, there stands a fair chance of seeing any crowd funded venture as suggested in this case in point, being bulk rice or wholesale rice.

By the above I mean our crowd fund members sourcing rice in bulk from India as a unit (through fellow C2C members who have supplier links in India and then selling that bulk rice on a wholesale bases to retail units in Zimbabwe, in SA, in Botswana, in any other viable African nation. Those independent retail units should be willing to repack and brand before re-selling, it is a possibility that wherever they are they also can be C2C members with shops or prepared to run rice selling tuck-shops

[12/08, 07:40] BTM: @ R20 per kg = US$1 purchase price here, add rough transport cost of USD0.15 makes it USD1.15. 2kg roughly USD2.30/kg landing price. This is USD0.50 above the average local selling price/kg of USD1.80.

[12/08, 07:42] BTM: Zimbabwe side, Harare that is

[12/08, 07:48] MM: This is financial literacy in motion.

[12/08, 07:50] MM: Imagine you use the building community power concept inherent in C2C to use a 30 t truck and trailer and then deliver to many Zim based buyers, what would be the impact?

[12/08, 07:59] BTM: There definitely is a huge trade discount which may push the unit purchase price per kg to at most USD0.50 purchase price pre carriage in wards. Add USD0.15 carriage inwards assuming it is a fixed per kg that now gives us USD$0.65/kg. 2 kg would now cost USD1.30 and this is some USD0.30 margin between the last average selling price here in Zimbabwe of USD1.60 and the landing price. That USD0.30 is what is shared between the C2C wholesale crowd funder and the the retail unit/s, per a 2kg pack of rice. Bulk fuel sector the bulk ferrier loads 40 000 litres diesel, may now want to do a quick convertion and see what in Kgs a bulk ferrier/haulage truck carries.

[12/08, 08:01] BTM: Obviously no discount from any supplier can go above 50% which is why I said at most.

[12/08, 09:08] BTM: If anyone in the energy sector (bulk fuel selling) makes 0.05 per litre after all costs including taxes in a cash profit margin, they have added into their bank account at end of selling USS2000.

Assuming the same case suffices with a truck load of bulk rice disposed of here in Zimbabwe on a wholesale basis, by at least 20 C2C member crowd funders, each adds USD100 to their bank account at each Haulage Truck transaction end.

From what investment. If a discounted Kg is purchase priced at US$1.15/kg at most (assuming a 50% trade discount from supplier) it costs the 20 C2C crowd funders together, 30 000 Kgs × USD1.15 = USD34 500. Each person incurs $1725 initial cost (capital outlay).

Rice sold at USD1.25 least and competitive price, that is USD37 500 thus cash profit margin is USD3000 before subtracting the retail unit’s take.  USD150 per head.

May be to include the low earning crowd funder, it should be USD345 per head per a truckload transaction.

Which is 100 C2C crowd funding heads at one go?

Can be less than 100 heads if there are others with a better financial leverage but willing to do it with others, not single handedly, not with only a selective few. Broad based empowerment is what crowd funding is about.

Brian Tawanda Manyati (BTM) is a Chartered Governor and Accounting Technician . Author’s contacts: LinkedIn briantawandamanyati, e-mail [email protected] and +263772815211