Umati Capital Receives $500,000 AGRA Grant To Boost Smallholder Farmers

Kenya’s Umati Capital has received $500,000 from The Alliance for a Green Revolution in Africa (AGRA) to assist smallholder farmers in Kenya.

The half million dollar grant is to be allotted over a 3 year period to Umati Capital and be directed to its Supply Chain Financing (SCF) product.  This will allow farmers to sell to superior buyers who offer better prices but have delayed payments rather than selling to less profitable traders who pay a lower amount upon delivery of produce.

The Supply Chain Financing product will allow a smallholder farmer (supplier) to access 80 percent of the invoice value at any time before the supplier is paid by the buyer in full. With this funding, smallholder farmers can stabilize their cash flow and receive much needed relief during the interim waiting periods.

Ivan Mbowa, Umati Capital co-founder, said“Our investors see a great opportunity in the agricultural sector which contributes US$ 16.6 billion to GDP. However, the sector has a credit gap of US$1.8 billion unserved by traditional financiers. To bridge this gap, the funding will advance Umati’s goal of financing and providing associated technology to increase the productivity for smallholder farmers.”

AGRA’s grant to Umati Capital is projected to be disseminated among over 50,000 smallholder farmers with a Supply Chain Financing product that seeks to increase farmers’ productivity and net income in the years to come.

“Agriculture is the next instalment of the Africa rising narrative. However, access to finance continues to be a major hindrance. We believe that through public-private partnerships and engagements such as this partnership, we can support farmers to contribute to economic growth by linking them to better and less risky finance options such as Umati Capital’s SCF product,” Dr. Agnes Kalibata, AGRA president  said.

“We are grateful to our friends at the MasterCard Foundation who have made this possible through the Financial Inclusion for Smallholder Farmers in Africa Project implemented by AGRA,” Dr Kalibata said.

Umati Capital can process the SCF loan without additional requirements of collateral in near real-time after sale or within 24-48 hours. Repayments are received directly from the buyer on behalf of the supplier with funds being transferred through integration with bank or mobile money systems.

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