Our Origin: How One Farmer Can Change the Face of Financial Services in Agriculture in Kenya

Welcome to Umati Capital’s blog with our first article of much more to come. We will share our (slightly edited yet unfiltered) story as we pursue our passion for becoming the top digital financial service provider across Africa. Our team will share both our successes and ambitions but also our challenges and fears so that you as the reader can truly appreciate the opportunity in financial services in the agricultural sector.


Umati Capital started in 2012 with the ambitious goal to introduce crowdfunding in Kenya. Ivan Mbowa and Munyutu Waigi, our co-founders, had engaged with many SMEs (small-and-medium sized enterprises) across industries in their lives pre-Umati Capital and quickly recognized the challenge around the lack of access to credit with growing and high-potential SMEs that did not fit perfectly into the stringent criteria from traditional financial institutions ie banks. They then thought to themselves, “instead of relying on banks, why not find individuals who also believe in the potential of SMEs and have them fund their growth?”

After some initial research, they realized that the Kenya’s Capital Markets Authority restricted crowdfunding below 100 investors for a single business. Not to be deterred, the co-founders decided to continue exploring financing options for SMEs.


We would like to proclaim that we started our exploration into financing options with quantitative and qualitative research that thoroughly assessed potential markets, challenges, and customer needs. With this analysis, we would then proclaim that we conducted a detailed product/market assessment complete with gap analysis.


But the true origin of Umati Capital is like that of most start-ups: messy, vague with no defined direction, wrought with failures (or lessons learned?), and opportunistic. By taking the failures in stride, we came upon the biggest opportunity: agriculture.


In December 2013, Umati Capital identified an opportunity to finance the small-scale suppliers ie smallholder farmers, of a dairy processor, Eldoville Dairies.

During our initial conversations with Eldoville’s farmers, we met Esther Mureithi. Esther is not your typical 45-year-old Kenyan dairy farmer. Born and raised in the dairy capital of Kenya also known as Nyandarua County, Esther has always stood out from her peers.

esther farmer.jpg
Esther (3rd from left) with her husband Mureithi (4th from left)

A mother of two children, she successfully paid for her eldest child to attend University without leaving the village she was born in by relying on earnings from her two-cow dairy business and corner shop or duka.

Esther attributes her success to her savvy nature and willingness to experiment. Therefore it came as no surprise to anyone who knew her that she chose to sell her milk to a new dairy processor, Eldoville Dairies, when they set up a collection center in her village in 2013. While the majority of smallholder dairy farmers sell their milk informally to brokers who go house to house offering instant cash payments, Esther chose to sell her milk to Eldoville who promised a 50% price premium on purchased milk with a catch: Esther would have to wait 30 days to get paid.

Foregoing daily cash payments from her milk meant that she could not stock her corner shop or take advantage of cash trading opportunities, but at the same time she could earn more money to pay her children’s school fees. Esther’s long-term perspective placed her in the minority as Eldoville struggled to meet their daily volume to collect from farmers.

Eldoville could not afford to pay cash immediately after collecting milk as Eldoville’s customers including supermarkets paid average of 90 days after sale. Dairy farmers, on the other hand, could not afford to wait 30 days for cash payment against milk sold since they needed access to cash immediately or what is called opportunity cost.

Umati Capital approached the dairy processor and began to discuss a novel solution: a digital loan product to Eldoville’s suppliers allowing them to access up to 80% of their milk’s value while allowing Eldoville to extend the payment date by an additional 60 days. Farmers would simply access our loan product by requesting funds through SMS. In case you are interested, the technical term for this financing is called invoice discounting or a form of factoring. This financing option for suppliers is called supply chain finance (more on the terms later).

As an early adopter of our loan, Esther quickly realized that she could take our loan to reinvest the extra cash into her corner shop and make more profit without using any more of her own cash.

Ever the entrepreneur, Esther realized that the dairy processor needed more milk and she could use our early payment to hire a motorbike and buy milk in cash from other farmers located in remote parts of her neighborhood. Her ingenuity elevated her to become a trader and farmer in dairy.

With our loan, Esther grew her daily milk volumes 2000% in less than 2 months and eventually received KES 1,000,000 (US$10,000) in our financing.


With a pilot successfully completed in the dairy value chain, we have now expanded across value chains including fresh fruits and vegetables, processed food and drink, cereals, pulses, meat, and even services to these businesses like logistics. Agriculture plays a vital role in the economic growth of Africa and Kenya employing over 65% of the working population, the highest percentage, and contributing over 30% of GDP in most countries with more than 35% to Kenya’s GDP both directly and indirectly.

We believe in the transformative power of working capital to accelerate the growth of micro and mid-sized agribusinesses / SMEs in Kenya and beyond. Join us on our journey to change the face of financial services, one farmer at a time.

Now, it is your turn! What is your ‘origin story’? Was your story as messy as ours?

We look forward to hearing your story in the comments!


3 thoughts on “Our Origin: How One Farmer Can Change the Face of Financial Services in Agriculture in Kenya”

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