Company NameUmati Capital
IndustryFinance and Financial Technology
Umati aims to increase the amount of financing available to companies working within the agricultural value chain that have limited or no access to financing from traditional sources, providing a faster and a more affordable option to customers.
Agricultural supply chain actors in emerging markets often have severe shortages in working capital but have few, if any, options to access financing. Invoice discounting would be an ideal product but commercial banks do not offer it on a standalone basis but rather as part of collateralized term lending and typically only to large customers. Companies in the agricultural supply chain are often not large enough and do not have collateral to access financing from these sources. In addition, most banks do not understand how to handle the seasonality and unique structure inherent to agricultural loans, instead choosing to avoid lending to the sector, as a result of their rigid and inflexible credit policies.
The Kenyan agricultural sector is valued at about $16.6 billion, contributing over 29% of Kenya’s GDP. However, the agriculture sector has traditionally been one of the lowest recipient of loans from commercial banks, as it comprised only ~4% of total bank loans in 2015. It is estimated that the agricultural sectors were underserved by traditional finance providers by ~$1.8 billion.
The Company addresses the working capital challenges of well-established processors and their suppliers through invoice discounting to the processor and reverse factoring to each of the processor’s suppliers. The reverse factoring benefits both the supplier who receives the finance as well as the processor who has more flexibility in its cash management. For the reverse factoring, the credit risk remains with the processor while the credit risk shifts to the processor’s buyer for the invoice discounting.
Additionally, most of the processors that Umati is targeting also do not have an effective supply chain management system. Many still utilize paper based invoicing and do not have insight into the quality and frequency of products received from the individual suppliers. Umati’s integrated technology platform automates the invoice management process with web-based software to enter and manage invoices.
- Ivan Mbowa, CEO (Tufts University (BA (Cum Laude)), Citigroup)
- Munyutu Waigi, CCO (Brunel University (BA), Ringier Kenya, Accenture, Data Integration)
Umati’s mission is to create opportunities for businesses in the agricultural supply chain to access formal financial services. The Company’s typical client would qualify as either a microenterprise or SME (small and medium enterprise), both of which are underserved by traditional financial services providers in the Kenyan market. In addition, Umati is targeting the agricultural sector which continues to be an important part of the Kenyan economy but which requires additional financing solutions to grow more efficiently.
Umati’s management is committed to hiring professionals at all levels of the organization and places high priority on providing them with a favorable working environment along with guaranteeing their personal safety and professional growth.
- Biashara Factors
- Speed Capital
- Chase Bank