Posted on May, 3, 2016 at 08:44 am
The Alliance for a Green Revolution in Africa (AGRA) has made a $500,000 grant to be disbursed over a 3 year period to Umati Capital to support smallholder farmers under Umati Capital's Supply Chain Financing (SCF) product.
With SCF, farmers can now sell to more professional buyers who offer better prices but have delayed payments as opposed to selling to informal traders who pay cash on delivery but offer low prices. This product will, therefore, streamline cash flows for smallholder farmers offer the much needed financial cushion during the waiting periods.
Umati Capital partnered with Airtel Money to bring Aida which is online business solution to mobile money for its farmers, traders and processors and have technologies that manage your business on your phone: quickly manage collections, view trends and pay suppliers using our mobile applications.The technologies also have tools to efficiently manage collections from suppliers in the field or at the factory and quickly spot errors and discrepancies in your procurement process
Ivan Mbowa, Umati Capital co-founder says, "Our investors see a great opportunity in the agricultural sector which contributes US$ 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 financial support will be used to design, pilot and implement various capacity building models for both agricultural buyers and suppliers in collaboration with Umati Capital. These models will focus on defining the basic financial literacy knowledge for smallholder farmers to understand how to assess various financing options to grow their agricultural businesses and then to understand Umati Capital's Supply Chain Financing product. The models will also incorporate cost-effective methods to deliver this knowledge at scale.
"Agriculture is the next installment 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," said Dr. Agnes Kalibata, AGRA president.
"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 added.
Source: allAfrica